(Yicai Global) March 22 -- A unit of hydraulics maker Fujian Haiyuan Automatic Equipments Co. will set up a CNY1.2 billion (USD188 million) new materials production base in Yiwu in China's eastern Zhejiang province, primarily to provide lightweight auto body parts to Zhejiang Geely Holding Group's new energy vehicle factory, which is currently under construction nearby.

Jianyang-based Fujian Haiyuan New Material Technology Co. plans to set up the facility in Yiwu's economic-technological development area, it said in statement, adding that the plant's first phase will consist of two production lines with annual capacity of 400 tons of lightweight automotive products, as well as two carbon fiber production lines.

Haiyuan New Material aims to benefit from Geely's recent moves in the NEV sector. Hangzhou-based Geely, one of China's biggest carmakers, is focusing on efforts on deriving 90 percent of sales from NEVs by 2020. It snapped up a 9.7 percent stake in Daimler AG for USD9 billion last month, as part of efforts to tap the Mercedes-Benz owner's expertise in electric vehicle technology. Geely's NEV factory in Yiwu is scheduled to open later this year.

China is a key battleground for the development of NEVs globally. Some 605,500 plug-in passenger cars were sold in China in 2017 as the nation captured a 49-percent share of the global NEV market and grew 30 times faster than the worldwide average, according to data from industry researcher EV Volumes.

Haiyuan New Materials will use the Yiwu facility to supply other carmakers in addition to Geely, it said. First-phase construction will take two years once building permits have been finalized and the firm aims to expand the facility with construction expected to start in 2019.

The company aims to cement itself as a leading Chinese manufacturer of high-performance fiber and composite materials, allowing the country's auto companies to reduce purchasing costs.