BYD Co, China’s largest rechargeable battery maker, will buy control of the country’s sixth-largest mini-car maker for 269.5 million yuan ($US33 million) in preparation for making batteries for electric vehicles, the country’s Business Daily Update said.

BYD said in a statement it agreed to buy 77 % of Xian Zhen Chuan Automobile Ltd, a State-owned company that makes 800 cc cars under the Flyer brand. The price is a 6.4% premium to Xian Zhen Chuan’s net asset value.

The acquisition will “expedite the development and production of rechargeable power batteries for electric motor vehicles,” President Wang Chuan-fu said in the statement. The company will fund the purchase from operating cash flow.

The purchase will be BYD’s first entry into car making. The company raised HK$1.4 billion in a Hong Kong initial public offering in July.