Nissan Motor Co. is expected to agree to help set up an electric-car program in a major Chinese city, in an unusual partnership between the Chinese government and a foreign company to further Beijing's efforts to develop environmentally friendly automobile technology.

 

Under the deal, which could be signed as early as last Friday, Nissan would work with China's Ministry of Industry and Information Technology and the government of Wuhan to cooperate on a pilot electric-vehicle program in the central Chinese city, according to people familiar with the matter.

 

Nissan is expected to provide free electric vehicles to Wuhan and to help develop a network of vehicle-charging stations, the people said. It isn't clear how many cars or how much money the project involves.

 

Nissan and the industry ministry are also expected to sign a memorandum of understanding to jointly explore ways to make electric vehicles popular in China.

 

The planned agreements are part of China's efforts to promote vehicles powered at least partly by batteries. China's government is encouraging its own auto industry to shift to such electric vehicles, believing auto makers can use the technology to narrow the gap with bigger foreign rivals. Beijing last month unveiled an auto-industry plan to create capacity to produce 500,000 "new energy" vehicles, such as all-electric battery cars and plug-in electric hybrid vehicles by 2011.

 

Wuhan, which has a population of nine million, is among 13 cities recently chosen by the Chinese government for a pilot program to boost use of new-energy vehicles. Those cities -- which also include Beijing, Shanghai and Chongqing, the country's biggest municipalities -- are supposed to provide subsidies for purchases of all-electric battery cars, plug-in hybrids and hydrogen-fuel-cell cars. They are expected to collectively put 60,000 new-energy vehicles in service in four years.

 

The industry ministry believes China could learn from Nissan, an experienced advocate of electric propulsion, which has plans for a big global push for its line of small battery cars, starting in 2010. By that year, the company is expected to start marketing a compact all-electric battery car to corporate-fleet customers in the U.S. and Japan. People familiar with the planned Nissan agreement said the joint effort could be extended to more cities, such as Beijing.

 

In China, Nissan plans to launch the same compact battery car as early as 2011 and is considering building factories to produce batteries and the entire car in China -- something Nissan wants to accomplish over the next few years to "be cost competitive," according to a senior company executive. Some auto makers believe that by 2020, 10% to 20% of China's passenger-auto sales will come from electric cars, plug-in electric hybrids and other new-energy cars.

 

The planned Wuhan program is expected to be patterned on a program currently being implemented in Nissan's home prefecture of Kanagawa, just south of Tokyo. Kanagawa plans to install 1,000 charge stations by 2014. Kanagawa Gov. Shigefumi Matsuzawa is expected to deliver a speech at an electric-vehicle forum in Beijing, where the Wuhan plan is expected to be announced.