In a joint statement released Monday, Siemens and Valeo estimated that the market for electric cars will grow at an annual rate of 20 percent until 2020.

The two companies said that, by joining forces in a fifty-fifty venture, they will seek to become global leaders in that market by joining forces in fifty-fifty venture, producing and selling affordable components for electric vehicles.

Alongside engines, there is also a need for range extenders and chargers, necessary for the petrol-free vehicles to function.

"The Valeo-Siemens joint venture is yet another example of forming a true Europe-based company," Siemens managing board member Klaus Helmrich said.

The project will be headquartered in Erlangen, Germany and will have facilities in France, Norway, Poland and Hungary. It also has its sights set on China, with at least one plant planned in the country.

Siemens has experience in the electric vehicles market through its E-Car Powertrain Systems Business Unit, which employs around 500 people. For its part, Valeo has a high-voltage power electronics business.

The statement did not provide any details regarding which electric carmakers the new venture would aim to compete against, or how it would finance its business.

The venture must first recieve the green light from employee representatives and anti-trust authorities, but aims to be operational by the end of 2016.

hch/jtm (DPA, Reuters)