The automakers will consider joint production of hybrid and electric vehicles in China, said PSA CEO Philippe Varin Sunday in Shenzhen during the partnership's groundbreaking ceremony.

Changan PSA Automobile Co. is a 50-50 joint venture based in Shenzhen. The partnership received final Chinese government approval in July.

The joint venture will start producing the luxury Citroen DS 5 model in Shenzhen in 2013 as demand in Europe weakens, Varin said.

"Slow European growth means Peugeot needs to expand in China," Varin said. "There are savings we must make in some parts of the world while we develop others."

He said savings would be made in Europe, but declined to indicate whether the savings would include job cuts.

The French automaker expects to introduce the first car for its China-only brand in 2014. The company also has said it aims to double its share of China's market to 8 percent in 2015, up from 3.4 percent in 2010.

Peugeot's China sales rose more than 10 percent this year to 400,000 units, said Gregoire Olivier, PSA's CEO of Asian operations.

When the joint venture was approved last July, PSA announced plans to invest $1.2 billion (7.6 billion yuan) in a Shenzhen assembly plant to produce 200,000 vehicles a year for Citroen and a new, shared brand.

Initially, 16 dealerships will sell the Citroen DS brand in China, and the partnership intends to expand its network to 25 dealerships by the end of 2012, said Zhanwang Ying, executive vice president of Changan PSA.

Electric-car sales in China are forecast to exceed those in the U.S. by 2020 as China, the world's largest polluter, seeks to cut emissions, predicts the Boston Consulting Group.

Electric cars may account for as much as 7 percent of total auto sales in China, Boston Consulting said in a June 14 report.

In five Chinese cities, EV purchasers qualify for a government sales incentive ranging up to 60,000 yuan, while purchasers of plug-ins can receive up to 50,000 yuan.

The government aims to have 1 million electric-powered vehicles on the road by 2015, according to the Ministry of Science.