BMW has joined forces with carbonfibre specialist SGL Group to produce lightweight parts for its new MegaCity electric vehicle.
MegaCity will take on Daimler's struggling Smart division with a range of affordable urban vehicles, in both two- and four-wheeled forms.
Two plants will be built in North America and Germany to manufacture carbonfibre parts on a “large scale” for the first time.
"We will enter into a new dimension in the use of carbon-fiber reinforced plastics, both in terms of volume per car and in vehicle numbers," a BMW spokesman said.
The companies are said to be investing 230million euros (£305million) in total.