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Geely is spending $4.6 billion on a battery plant as its electric car ambitions grow

New Delhi(CNN Business) Geely will pour nearly $5 billion into building an electric battery plant in China, as the country's top privately-owned carmaker moves more aggressively to bolster its electric vehicle ambitions in the world's largest market.

The company will invest 30 billion yuan ($4.6 billion) into a battery factory in Ganzhou, a city in eastern China, according to a statement released Sunday by the local government. The factory will have a capacity of 42 gigawatt-hours per year, the statement said. That's similar in scale to the factories Germany's Volkswagen (VLKAF) said Monday it would build in Europe.

Geely confirmed in a statement on its WeChat account that it signed the agreement over the weekend. It added that it had already been working with Farasis Energy, a local battery company.

The demand for batteries is expected to soar in China as the country's electric car sales are projected to touch six million units by 2025, according to calculations by S&P Global Platts.

Carmakers worldwide are charging ahead on plans to develop electric vehicles as they come under growing pressure from regulators to tackle the climate crisis. In China, the government has been aggressively pushing new energy vehicles to tackle its own pollution problems, and the competition among homegrown and foreign brands has been getting fiercer over the last year.

The race has resulted in some strange bedfellows in China. Geely's factory plans come two months after it announced that it would be teaming up with Chinese search engine giant Baidu to manufacture intelligent electric cars. At the time of the announcement, Geely said that it planned to transform from a car manufacturer to "a tech company" focused on "intelligent, electric transport." The company also announced big tie-ups with Chinese social media giant Tencent (TCEHY) and Apple (AAPL) supplier Foxconn in January.

While Geely has been announcing its flurry of partnerships, Elon Musk's Tesla (TSLA) has hit some road bumps in China.

The American company, which was formerly China's top selling electric car brand and which has built a massive gigafactory in Shanghai, was summoned by five Chinese regulatory agencies in February to answer questions about the quality of its cars. China's BYD (BYDDF), which is backed by Warren Buffett, unseated Tesla as the country's top-selling electric car brand earlier this year.

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