CNN  — 

Rivian and Mercedes have signed a “memorandum of understanding” to work together on production of electric vans and to begin making them in Europe.

Together, the companies will create a factory in Europe dedicated to producing electric vehicles. The companies will jointly invest in changing an existing Mercedes production site in central or eastern Europe to adapt for building new electric vans, the companies said.

Rivian currently makes electric vans for Amazon, its biggest investor.

Rivian has already agreed to supply 100,000 electric delivery vans for Amazon, which owns 18% of the electric truck and SUV maker. While popularly known for its luxury cars, Mercedes is also a major supplier globally of commercial vans, selling about 334,000 last year. More than 9,000 of those were electric, the company said. In addition to gasoline- and diesel-powered vans, Mercedes also produces a number of electric van models, including the large eSprinter the smaller EQV.

Under the agreement, the companies will produce two large vans – one based on Mercedes’ engineering and the other with new “second-generation” Rivian engineering.

Both Mercedes and Rivian also offer electric passenger vehicles. Rivian sells the R1T, a midsize pickup truck, and the R1S SUV. Mercedes sells electric cars, like EQS sedan, and electric SUVs.

The companies also said they would explore other cost-saving opportunities in the future.