Ford Motor Co. is in discussions with a Chinese automaker about creating a joint venture to build electric cars in China.
The American automaker has entered into a memorandum of understanding with Anhui Zotye Automobile Co. to explore the possibility of creating a Chinese brand aimed at producing cars for the local marketplace, which is the world's largest for electric cars.
The Chinese government has been aggressively encouraging a shift toward battery-powered vehicles to help reduce smog and turn the country into a leader in automotive electricfication.
Ford previously said it plans to offer electric versions of 70 percent of its models in China by 2025.
Privately owned Zotye Auto, headquartered in the eastern city of Huangshan, produces its own electric vehicles and said sales in the first seven months of this year rose 56 percent over the same period of 2016 to 16,000.
"This presents us with an exciting opportunity to leverage each other's strengths," Zotye chairman Jin Zheyong said in a joint statement.
Sales of pure-electric and gasoline-electric hybrids in China rose 50 percent last year over 2015 to 336,000 vehicles, or 40 percent of global demand. U.S. sales totaled 159,620.
Beijing has supported sales with subsidies and a planned quota system that would require automakers to produce electric cars or buy credits from companies that do.
Ford said it expects China's market for all-electrics and hybrids to grow to annual sales of 6 million by 2025.
Volvo Cars announced plans this year to make electric cars in China for global sale starting in 2019. General Motors Co., Volkswagen AG, Nissan Motor Co. and others also have announced plans to make electric vehicles in China.
The Associated Press contributed to this report