FILE PHOTO: The emblem of the Geely automobile maker logo is seen at the IEEV New Energy Vehicles Exhibition in Beijing, China October 18, 2018. REUTERS/Thomas Peter/File Photo

SEOUL (Reuters) - South Korean battery maker LG Chem Ltd said on Thursday it had signed an agreement to set up a joint venture with China’s Geely Automobile Holdings Ltd to produce batteries for electric vehicles.

The joint venture would have annual production capacity of 10 GWh by the end of 2021, and its products would be supplied to Geely’s electric vehicles from 2022, LG Chem said in a statement.

The two parties would invest $94 million each in the venture, LG Chem said in a statement.

Vehicles equipped with South Korean batteries currently are not eligible for government subsidies in China, the biggest auto and EV market in the world.

But Korean battery makers including LG Chem have announced investment plans to expand capacity in China, hoping China’s plan to phase out subsidies over the next couple of years will level the playing field.

“Through the joint venture, LG Chem has secured a stable structure to provide batteries for electric vehicles to the Chinese market,” LG Chem said in a statement.

The South Korean company said it would pursue more joint ventures with other global carmakers.