Shanghai Automotive Industry Corp yesterday said it will form a US$20-million venture with United States-based A123 Systems Inc to jointly develop batteries and systems for green vehicles in China.

The Shanghai Advanced Traction Battery Systems Co, which is 51 percent owned by SAIC, will focus on developing, manufacturing and selling complete vehicle traction battery systems for use in hybrid cars, electric vehicles, heavy duty trucks and bus applications in China.

A123 Systems is a manufacturer of lithium-ion batteries which it will supply to SAIC and other Chinese car makers for use in new energy vehicles.

"The electrification of the global automobile industry is irreversible," said Chen Hong, president of SAIC. "We should grab the opportunity and made sufficient preparation for fundamental changes."

SAIC, the Chinese partner of General Motors Corp and Volkswagen AG, earlier announced it would source hybrid technologies from Delphi Corp and has also reportedly agreed to buy lithium-ion batteries from BYD Automobile Co, a Chinese battery and electric car maker backed by US billionaire Warren Buffett.

Electric cars are becoming a trend globally because of rising awareness of energy efficiency and environmental protection, according to analysts.

SAIC plans to begin marketing a series of new energy vehicles next year, including the Roewe 750 mild hybrid, the Roewe 550 plug-in strong hybrid as well as its self-developed electric car.

Early this year, SAIC invested 2 billion yuan (US$293 million) in a new energy company to develop power and control systems to be used in green vehicles.