State-owned carmaker Dongfeng Motor plans to join a 1.2 billion yuan ($174 million) new-energy vehicle fund, as sluggish car sales and shrinking government subsidies put pressure on China’s auto companies.

Dongfeng will invest 594 million yuan into the fund, which it is setting up in partnership with two financial companies, the company said in a recent stock exchange filing (link in Chinese). The fund, which will mainly be used to support Dongfeng’s own new-energy vehicle projects, is still pending official registration, the company said.

Dongfeng said the move, which is a response to the government’s call for greener transportation, would boost its liquidity. As the domestic car market faces sluggish growth and government cuts to new-energy subsidies, some manufacturers are struggling to meet sales goals while complying with increasingly strict emissions standards.  

Related: China Seeks to Bolster Car, Electronics Sales as Growth Slows

Contact reporter Zhao Runhua (runhuazhao@caixin.com)