Toyota and Germany's BMW on Thursday said they were deepening ties on developing fuel-cell technology and vehicle batteries as the auto giants push into the green market.
The automakers said they reached binding agreements on several strategies which also include the possible joint development of a mid-sized sports vehicle, with a feasibility study expected to be completed by the year's end.
"Toyota and the BMW Group are seizing this unique chance to lead the industry towards the future of mobility," Herbert Diess, a member of BMW's management board, said in Tokyo.
"By doing so we will play a central role in defining tomorrow's vehicles."
The agreement would also see the pair work together on developing lightweight vehicle bodies and next-generation vehicle batteries.
The development of fuel-cell systems has a target completion date of 2020, they said.
"The companies are convinced that fuel cell technology is one of the solutions necessary to achieve zero emissions," said a joint statement.
Under an earlier deal, the German automaker agreed to provide diesel engines for Toyota, a major player in environmentally friendly vehicles, as the Japanese firm looks to boost sales in Europe, where more than half of passenger cars are diesel powered.
Demand for lower-emission diesel vehicles is forecast to grow, with further technological advances in the field seen as crucial due to toughening emissions standards.