SAIC-GM-Wuling Automobile Co. on Friday started construction of a new energy vehicle plant with the intention of turning out 200,000 vehicles each year.

Investing 3 billion yuan (470 million U.S. dollars), SAIC-GM-Wuling joined many rivals in the new energy vehicle sector betting on huge market potential.

China pays high subsidies on new energy vehicles to reduce pollution.

In the first seven months of this year, sales of new energy vehicles increased by 2.6 times year on year to nearly 90,000 despite weak auto sales in general.

On Friday, the automaker also started operations of an assembly plant with an annual production capacity of 400,000 conventional vehicles.

The company sold 217,000 Baojun cars in the first seven months of the year, up 424 percent.

Established in 2002, the automaker is a joint venture between General Motors, Shanghai Automotive Industry Corp. and Liuzhou Wuling Motors Co. Its sales in 2014 exceeded 1.8 million vehicles.

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