Daimler and Cummins have announced they have inked an agreement that will see the two companies work together globally on medium-duty commercial vehicle engines.

The MOU will see Cummins set up an engine plant within the Mercedes-Benz Mannheim campus to first develop medium-duty engines to Euro VII emissions standards for Daimler trucks and buses, and will eventually become Daimler’s worldwide medium-duty engine provider.

Daimler, meanwhile, will focus on developing zero emissions drive technologies and its own heavy-duty engine platform. Further opportunities for collaboration are being evaluated, the companies said this morning in a release.

“The MOU between Daimler and Cummins makes engine production at the Mannheim location fit for the future and at the same time strengthens our competitiveness,” said Martin Daum, chairman of the board of management at Daimler Truck AG.

“With the changeover to Euro VII, we would have to invest considerable resources in the further development of our medium duty engines. We are now freeing up these funds to focus them on the technologies that are crucial to our long-term corporate success in the transformation of our industry.”

“We are pleased to announce this important strategic partnership with Daimler to provide the medium-duty engine systems for Daimler Trucks and Buses in global markets,” said Tom Linebarger, chairman and CEO, Cummins.

“Our partnership is a terrific opportunity for both companies to be more competitive, drive global innovation, expand offerings to customers and reduce emissions. We are looking forward to working with Daimler on this and exploring other potential opportunities to grow our respective companies. As the leading independent global power solutions provider, Cummins is committed to ensuring any customer anywhere has the right solution, by offering them a broad range of power solutions from advanced diesel, near-zero natural gas, fully electric, hydrogen and other technologies.”

Cummins said it will use its existing footprint and supply chains in other regions, including North America. Daimler said the move allows it to maintain employment at its Mannheim plant where it currently builds medium-duty engines.

It also says the deal allows it to accelerate development of alternative and emerging technologies, including non-diesel engines.