German engineering giant Siemens and French automotive supplier Valeo are to create a joint venture to develop powertrains for electric cars.

The 50:50 partnership will develop and sell high-voltage electric motors and power electronics products required for electric passenger cars and light commercial vehicles.

It will combine the French company’s power electronics business, which employs 200 people, with the E-Car Powertrain Systems Business Unit at Siemens that employs around 500 people.

It will be headquartered in Erlangen, Germany, with regional set-ups in France, Norway, Poland, Hungary and China.

According to Siemens, the electric vehicle components market is expected to grow at an annual rate of more than 20% until 2020.

Klaus Helmrich, Member of the Managing Board of Siemens AG said: “Combining Siemens’ extensive experience in electric motors and inverters with Valeo’s automotive business expertise and worldwide customer base would provide both companies with a solid basis in the growing electro mobility market.”

The joint venture is expected to start operations in the last quarter of 2016.

Earlier this month Siemens announced it is joining forces with European plane maker Airbus to work on electric aircraft technology.