Hybrid Kinetic Group, controlled by exiled Chinese tycoon Yang Rong, plans to produce low-cost clean-technology automotive parts in China, allowing local carmakers to sell green vehicles at conventional car prices, its chief executive officer was quoted as saying on Monday.

According to Reuters, the plan to sell auto parts marks a shift from Yang's original plan to make 3m clean energy vehicles per year in China. Yang fled the country in 2002 and now lives in the United States after being accused of economic crimes, the new agency said.

Chuantao Wang, an engineer based in California, told Reuters the company had identified a site for production of five key parts - batteries, motors, engines, compressors and transmissions - for green vehicles in Shandong province from 2012/2013.

The project's initial capacity would provide enough of the five components to make 500,000 vehicles a year. The five components would have a combined estimated selling price of about CNY80,000 (US$12,000).

The company will fund the project from internal resources, and we will have some investors and industry partners," Wang told Reuters in Hong Kong. He declined to give financial terms for the project.

The move follows the Chinese government's introduction of subsidies of up to CNY60,000 for the first 50,000 electric or hybrid vehicles sold by each automaker in China.

"It makes no sense for us to produce millions of green vehicles when only 50,000 will receive subsidies," Wang said.

China, the world's largest auto market, had 160 automakers, of which 120 were small local manufacturers, some of which had expressed interest in buying the parts, he added.