Nissan and Renault have unveiled the details of a major shake-up of their often strained 24-year-old alliance.
The announcement comes after months of negotiations between the motor industry giants.
In a joint statement, the two firms said they had "rebalanced" their relationship by agreeing that Renault would cut its stake in Nissan, reports BBC.
Under the deal, Nissan will take a stake in Renault's flagship electric car unit Ampere.
The companies also said that they will work together on electronics and battery technology, as well as making savings from joint projects in Europe, India and Latin America.
The agreement will see Renault cutting its stake in Japan's Nissan from more than 43 per cent to 15 per cent, the same size as Nissan's stake in its French counterpart.
The companies also said that Nissan will take a stake of up to 15 per cent in Renault's new electric vehicle venture, Ampere.
Christopher Richter from investment group CLSA said the changes were necessary to keep the two-decade partnership alive.
"It's a last ditch attempt to save an alliance where the two partners don't get along very well," he told the BBC.
"Hopefully, by equalising their status in the alliance, they can put some of the rancour behind them, and find a limited number of activities where they can cooperate and add value to each other," Mr Richter added.
The move comes at a time of huge change for the motor industry as it transitions to electric vehicles and adopts new technology.
"We all know that auto firms will be amalgamated into five or six globally, especially due to the big changes occurring in AI technology," Seijiro Takeshita from the University of Shizuoka in Japan told the BBC.
"In that context, Nissan and Renault need to find a good partner, and that's what they are, at least nominally. They cannot and do not have the luxury of going alone in this battle," he added.
The alliance was formed in 1999 when Renault rescued Nissan from the brink of bankruptcy.
In 2016, they were joined by Mitsubishi, after Nissan took a major stake in the struggling Japanese firm.
The alliance was rocked in November 2018 when Nissan boss Carlos Ghosn was arrested over allegations that he had understated his annual salary and misused company funds. Mr Ghosn denied the charges.
At the time, Mr Ghosn was the chairman of the Japanese carmaker. He was also chairman of France's Renault and the boss of a three-way alliance between both carmakers and Mitsubishi.