US-based electric vehicle infrastructure company Better Place has signed a memorandum of understanding (MOU) with Chery Automobile to collaborate on electric vehicle technology in the world’s largest auto market.

Under the terms of the MOU, Better Place and Chery will jointly develop switchable-battery EV prototypes with the goal of securing regional Chinese government EV pilot projects.

“With only 2% of China’s population owning cars and 80% of sales in 2009 to first-time car buyers, China has the opportunity to create and lead an entirely new category around clean transportation,” said Dan Cohen, vice president of strategic initiatives for Better Place. “With the scale of Chery’s design and manufacturing capability and an industrial policy that favours EV over ICE, we believe China represents an unprecedented opportunity for Better Place. Our collaboration with Chery is just the beginning for Better Place in China.”

“Chery has been a pioneer in EV technology since 2001,” said Dr. Yuan, vice president, Chery. “We’ve closely followed Better Place for nearly two years and believe that our collaboration offers both companies the potential to lead the EV market in China and beyond.”

China has set an industrial policy with the objective of becoming the largest EV developer and manufacturer in the world, enabling the country to leapfrog internal combustion engine (ICE) technology and go straight to electric transport, Better Place pointed out.

HSBC research predicts that China’s share of the global EV market will grow from 2.7% this year to 35% by 2020. During this time period, China will overtake Japan by 2016 and the US by 2019 in dominating the global EV market.

The Chinese government will start an electric vehicle funding initiative this July, while charging stations are due to be established within a few years.

Earlier this week, Volkswagen was reported to be looking at assembling and selling electric cars in China by 2014.