(RTTNews) - With a view to introducing a carbon-neutral transport in Europe, Daimler Truck AG and Volvo Group agreed to set up a 50-50 joint venture, that will make and market fuel cell systems for heavy-duty vehicle applications.

"This joint initiative with the Volvo Group is a milestone in bringing fuel cell powered trucks and buses onto our roads," said Martin Daum, Chairman of the Board of Management Daimler Truck AG.

The aim is to to offer heavy-duty vehicles with fuel cells for demanding long-haul applications in series production in the second half of the decade.

The companies will use hydrogen as a carrier of green electricity to power the vehicles and bring them on the road in the second half of the decade.

Daimler Truck AG and Volvo Group have signed a preliminary non-binding agreement with the intention of signing the final agreement by the third-quarter and close the deal before year-end 2020.

Daimler will "consolidate all its current fuel cell activities in the joint venture." The Volvo Group will buy 50% in the joint venture for about 600 million euros on a cash and debt free basis, the companies said in a statement.

The joint venture will comprise the operations in Nabern/Germany with production facilities in Germany and Canada.

The companies said, "A hydrogen fuel cell converts the chemical energy of the fuel, in this case hydrogen, and oxygen into electricity. The electricity powers the electrical motors that propel an electrical vehicle."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.