Japanese carmaker Toyota and China’s FAW Group plan to set up a joint venture to produce electric vehicles in the northern Chinese city of Tianjin, Reuters reported Saturday, citing a government document.

The document issued by authorities of the China-Singapore Tianjin Eco-City showed that the joint venture plans to invest 8.5 billion yuan ($1.22 billion) in the planned factory, which will manufacture some 200,000 new energy vehicles a year.

The Chinese government currently has a quota policy which means passenger car manufacturers are required to annually produce a specific proportion of their overall sales as new energy vehicles, as part of efforts to promote sales of green cars.

Other foreign carmakers are also increasing the number of electric cars they manufacture in partnership with local players in China, the world’s largest market. That includes Volkswagen, which has begun making electric vehicles on a trial basis at its $2.5 billion Shanghai plant jointly established with SAIC Motor late last year.

In January, China’s new energy vehicle sales sharply dropped 54.4% year-on-year to 44,000 units, marking the seventh consecutive month of decline after Beijing curbed government incentives midway through last year.

Contact reporter Ding Yi (yiding@caixin.com)

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