Lithium-ion battery maker EnerDel said parent Ener1 signed an agreement for a joint venture with Chinese auto parts maker Wanxiang's electric vehicle unit, as it looks for access to the world's fastest growing electric vehicle market.
Ener1 shares rose as much as 14 percent in trading after the bell.
The joint venture will begin producing battery systems in 2010 for Wanxiang's existing backlog of customers in China in the passenger and heavy-duty market segments, the company said in a statement.
"Over the next decade, we see demand for as many as one million heavy-duty vehicles. That's a market opportunity worth tens of billions of dollars for the lithium-ion battery industry," Ener1 Chief Executive Charles Gassenheimer said.
Earlier this week, Honda Motor Co had said it was interested to develop electric car batteries in China to tap the country's technology and vast resources.
The electric vehicle division of privately held Wanxiang has been supplying the 2010 Shanghai World Expo, and will also supply the Asian Games, to be held in Guangzhou in November 2010, the release said.
Wanxiang's electric vehicle division has planned production for its current customer backlog of 2,000 powertrain and battery pack systems in 2010, which involves cars, buses and commercial utility vehicles.
Both companies expect the joint venture will enable planned production volumes for 2010 to increase by as much as 50 percent.
With China's new-car market of more than 10 million vehicles a year, Beijing's stance towards electric cars could well determine the speed of roll-out for many automakers that are still on the fence.
Last month, Volkswagen AG, China's top foreign brand, said Chinese consumers' reaction to its electric cars would determine the fate of its plans to lead the industry in battery-powered vehicles by 2018.
