Daimler and the BMW Group are to work together on automated driving technologies.
In an announcement on Thursday, the auto giants said their initial focus would be on the development of "next-generation technologies" for automated driving on highways, driver assistance systems and parking features.
BMW and Daimler said that their collaboration would focus on Levels 3 and 4 of SAE International's levels of driving automation. Five "levels" of driving automation have been defined by SAE International, a global association of over 128,000 engineers.
At Level 5, automated driving features can drive a vehicle under all conditions. At Levels 3 and 4, automated driving features allow technology to drive a vehicle under certain, limited conditions.
The two companies said they viewed their partnership as being a "long-term, strategic cooperation", adding that they were aiming to make "next-level technologies widely available" by the middle of the 2020s.
Thursday's announcement comes a week after BMW and Daimler announced a new one billion euro mobility partnership.
Earlier this week, the CEO of Arm Holdings told CNBC that it would be "a while" before self-driving cars become mainstream.
"It is a phenomenally hard problem to anticipate what a car could do under absolutely any set of circumstances," Simon Segars, who was speaking with CNBC's Karen Tso at the Mobile World Congress in Barcelona, Spain, said earlier this week.
"I think you're going to start to see early services, in quite a constrained way, quite soon over the next couple of years," he added, explaining that there was "some way to come" before the technology was "completely mainstream."