The race to create practical and affordable electric cars has heated up with news that Dongfeng Motor Corp (China’s third-biggest automotive manufacturer) is set to invest 3 billion yuan ($487 million) in the next five years to create hybrid and electric vehicles.

Initially the company will make hybrid cars before it moves into full electric passenger cars. According to the Shanghai Daily, Dongfeng will even go as far as creating its own batteries. There is no details as to exact specifications of its electric or hybrid vehicles.

It’s more than likely that the technology will be borrowed from joint-venture partners Honda and PSA/Peugeot-Citroen SA.

The aim is to sell around 150,000 hybrid and electric vehicles by 2015 (split 2/3 towards hybrid) with sales expected to eventually make up at least 20 percent of Dongfeng overall sales.

The Chinese government recently announced that it will subsidize the cost price of alternative fuel cars in five cities.