Daimler's troubled minicar brand Smart has been thrown a lifeline by Geely which will help with the development of a next-generation lineup to be built in China and sold globally.

Daimler and Geely on Thursday signed an agreement to form a 50:50 joint venture based in China to own, operate and further develop the Smart brand which has failed to take off since its inception in 1998. Daimler doesn't provide brand-specific financial results but Smart is thought to be a perennial money-loser, with the losses over the brand's two-decade life thought to be in the billions of dollars. Smart's global sales dipped 4.6 percent to just 128,802 units in 2018.

The joint venture, whose financial terms have not been disclosed, will see a new generation of fully electric Smart cars enter production in China starting in 2022. Mercedes' design team has been tasked with penning the future Smarts while Geely will oversee the engineering. This time, Smart will also offer subcompacts as well as its traditional minicars.

Geely Chairman Li Shufu (left) and Daimler CEO Dieter Zetsche

Geely Chairman Li Shufu (left) and Daimler CEO Dieter Zetsche

The current Fortwo plant in Hambach, France, will be retooled to produce a future compact EV from fellow Daimler brand Mercedes-Benz. It isn't clear what will happen to the Renault plant in Novo Mesto, Slovenia, where the Forfour is built alongside the related Renault Twingo.

“We fully respect the value of smart,” Geely Chairman Li Shufu said in a statement. “As equal partners, we are dedicated to promoting the smart brand globally; we will leverage our experience and global competencies in brand management, R&D, manufacturing, supply chain management and other areas.”

The latest agreement is an extension of an existing relationship between Daimler and Geely. Geely, which owns Volvo, Lynk & Co. and Lotus, is the single biggest shareholder of Daimler after acquiring a 9.7-percent stake in 2018, and the two have already agreed to establish a premium ride-hailing service in China.