Guangzhou Automobile Group Co., Ltd. (GAC), BYD, and the municipal government of Conghua in south China's Guangdong Province signed an investment agreement on Wednesday to set up a new energy vehicle joint venture.

Under the agreement, headquarters for the new joint venture will be established in the Mingzhu industrial zone in Conghua City, with a focus on the production of electric vehicles, hybrid passenger cars, commercial buses as well as key components.

Apart from supplying new energy vehicles to the domestic market, the products will also be exported in the future, according to the agreement.

GAC said that it attaches great significance to the development of new energy cars and boasts mature technologies in vehicle production, while BYD has expertise in new energy technologies. "The cooperation will help bring down production costs and enlarge the new energy vehicle industry in Guangdong Province," the company said in a press release.

Guangzhou, provincial capital of Guangdong, is aiming to have a total of 10,000 new energy vehicles on its roads by the end of next year, of which 2,000 will be new energy buses.

An official report on Tuesday said that the number of new energy cars sold in China this year may hit 35,000, twice as many as were sold in 2013, as the government promotes use of greener vehicles.

Sales may reach 60,000 if hybrid-power vehicles are taken into account, according to the report on China's auto industry released by the China Association of Automobile Manufacturers.

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