Volkswagen AG has teamed with Chinese manufacturer FAW Group Co to form a new company that will produce electric vehicles in China.

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To be known as ‘Kaili’, the brand aims to become a big player in the booming passenger EV market in China by offering “attractive and affordable electric vehicles”.

It is understood the first Kaili vehicles will go on sale in either 2013 or 2014.

The Kaili expansion is just one part of Volkswagen’s enormous investment in China. Between now and 2015, the German automotive giant plans to spend 10.6 billion euros ($14.1 billion) developing new products and boosting its production capacity.

According to Volkswagen, the Chinese government has been “encouraging joint ventures of foreign car manufacturers to develop indigenous brands”.

In 2009, Volkswagen joined forces with BYD to work on electric vehicles and lithium-ion battery technology.

Like many other brands, China has become Volkswagen’s largest global market for sales.

More than 578,000 vehicles from its core passenger brand have been sold so far this year, representing an increase of 17 percent.