On Friday, Toyota Motor Corp. and Mazda Motor Corp. signed a deal to enter into an alliance. As part of the plan, the pair will build a new factory in the US and develop new electric vehicles and connected car and autonomous driving systems. Each company will purchase five percent of the other’s shares.

In May 2015, the two companies entered into a partnership to explore avenues of mutual benefit, sharing complementary technologies. This new deal strengthens that partnership.

The site of the new $1.6 billion US factory is yet to be determined, but it’s planned to be an equal venture between Mazda and Toyota. The site will employ up to 4,000 workers and produce around 300,000 vehicles a year starting in 2021. Mazda says it will produce CUVs for the North American market at the new plant, and Toyota will use it to build Corollas. As a result, Toyota’s new factory in Mexico will instead shift to production of the Tacoma pickup truck instead.