SAIC Motor will spend nearly $300 million on a venture to make green vehicles. China's biggest automaker, which has alliances with General Motors and Volkswagen, plans to take a 10 percent stake in the venture. It will focus on the development of hybrid and electric vehicles, according to a statement filed with the Shanghai Stock Exchange. Its parent company, Shanghai Automotive Industry Corp. (SAIC), will have a 90 percent share in the venture.

SAIC Motor said the new venture will also involve research and development of core components for the 'new energy' vehicles, such as electric transmissions and new power systems.

Carmakers have been called on by the Chinese government to pour more resources into alternative vehicles and power plants to lower fuel consumption and meet higher emissions standards. The companies are also motivated by a rising market demand for eco-friendly vehicles caused by the fuel crisis and growing pollution.

SAIC earlier said it targets being able to mass-produce hybrid vehicles by 2010, with an annual production target of 10,000 units. The company has also pledged to speed up development of fuel-cell vehicles and build its own engineering capability.

The SAIC-GM joint venture launched its first locally produced hybrid car, the Buick LaCrosse hybrid sedan, in January.

Shanghai General Motors is also expected to produce fuel-cell vehicles after 2010.