Toyota and Mazda announced the formation of a new alliance that includes establishing a new factory in the U.S. for building compact Toyotas and Mazda SUVs.

The two companies will also work together on electric vehicle and connected technologies and new safety systems among other things.

The new factory will cost $1.6 billion and its location is still undecided. It will have an annual capacity of 300,000 cars and will create around 4,000 new jobs.

Toyota will build the Corolla there, once production starts in 2021, but Mazda hasn’t announced which crossover aims to produce there. This means that Toyota will build the Tacoma in its new plant in Guanajuato, Mexico which is also currently under construction.

“The greatest fruit of our partnership with Mazda is that we have found a new partner who truly loves cars,” said Toyota President Akio Toyoda. “It has also sparked Toyota’s competitive spirit, increasing our sense of not wanting to be bested by Mazda.”

“Nothing would please me more than if, through this alliance, we can help to energize the auto industry and create more car fans by bringing together two competitive spirits to spur each other on, leading to innovations and fostering talent and leaders,” added Mazda President and CEO Masamichi Kogai.

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