Geely said it would build an electric vehicle battery factory with a planned annual manufacturing capacity of 42 gigawatt hours (GWh) in China’s eastern city of Ganzhou, as it expands its EV line-up in the world’s biggest car market.

The total investment in the project by Geely’s technology arm will be 30 billion yuan ($4.61 billion), according to a separate statement from the local government. Geely’s technology group has previously invested in Ganzhou-based EV battery maker Farasis.

The planned factory comes after Geely announced a flurry of tie-ups in January aimed at turning the automaker into a leading EV contract manufacturer and engineering service provider, as it fights the incursion of EV leader Tesla Inc.

Geely, which owns Volvo Cars and a 9.7% stake in Daimler AG, is competing with Great Wall and Nio Inc.

China’s government has heavily promoted new energy vehicles (NEVs) – such as battery-powered, plug-in petrol-electric hybrid and hydrogen fuel cell cars – in response to chronic air pollution, spurring interest from technology companies and investors alike.

China forecasts NEVs will make up 20% of its annual auto sales by 2025 from around 5% in 2020.

($1 = 6.5021 Chinese yuan renminbi)