GKN declined to name the European client, but said the manufacturer would sell Chinese-made electric motors worldwide, and further supply agreements with domestic and global vehicle manufacturers had been signed.
The Shanghai Motor Show, which opens to the public from Friday, will display innovation of electric models that are indicated to appeal to Chinese motorists who are watching out for the unknown innovation's reliability and expense.
But by floating proposals to require automakers to boost sales of so-called "new energy vehicles", or risk being penalised, Beijing has given a powerful incentive for them to focus the development of such vehicles in China.
Chinese buyers have shown little enthusiasm for electric cars due to concern about cost, reliability and limited range. But at the same time, it is cutting subsidies on green cars by a fifth this year, a move that could deepen manufacturers' losses on such models and discourage consumers from buying them.
-Volkswagen, Europe's biggest automaker, plans to launch its first pure-electric vehicle in China next year as Beijing steps up pressure on the industry to promote alternatives to gasoline.
"We are going to localise electric cars for Mercedes-Benz", Daimler's board member responsible for China, Hubertus Troska, said.
General Motors Co.'s Buick unit announced plans last month for Chinese sales of its Velite 5 gasoline-electric hybrid sedan.More news: Tillerson declares the Iran nuclear deal a failure
Automakers and government officials have been bargaining over China's electric vehicle policy for years. More recently, the government has indicated that timetable could slip.
Big four-wheel-drive SUVs are popular, accounting for 40 percent of sales in China a year ago. It is developing a fully electric auto on its Scalable Product Architecture (SPA) as well. It also plans to bring an all-electric sport-utility vehicle to China over the next five years. Lynk & Co has said it plans to sell vehicles in the United States and Europe after launching in China.
Daimler, which has trailed German peers BMW and VW-owned Audi in terms of expanding its Chinese manufacturing capacity, is also preparing to make Mercedes-Benz electric cars in Beijing.
Volvo also plans to launch another larger electric auto by 2019. He said VW's venture with Jianghuai involves jointly developing the product.
To be sure, even as automakers renew commitments to produce more NEVs, it's not clear how aggressively they would push those cars in the marketplace.
The vehicle will be an all-new model, but Volvo CEO Hakan Samuelsson declined to say whether it would be a crossover, sedan or some other body type.
Considering that China is one of Volvo's most important markets, and increasingly so, and that the country is also the world's biggest market for electric cars, the decision does make a lot of sense.