The two companies will work together to speed the development of engines, small cars and batteries with the goal of keeping pace with strengthening fuel economy rules and competing in emerging markets like China, Russia and Brazil.

What does this mean on the product front? Daimler will begin with a redesign of the Smart car, while adding a larger, four-seat version in at least Europe. Nissan will work on a four-cylinder engine for its luxury brand Infiniti, using Mercedes-Benz technology to develop a more fuel-efficient engine. When we’ll see any of these vehicles remains undetermined.

Ghosn’s point is that unless a company has a scale of investment similar to Toyota or GM and is selling 8 million or 9 million cars every year with a range of products, it’s going to become more and more difficult to survive. This makes a partnership with a similarly sized automaker highly appealing.

Nissan/ Renault CEO Carlos Ghosn Says Venture With Daimler Ensures Survival (Drive On)