US-listed Chinese used car dealer Kaixin Auto Holdings said on Thursday it entered into a binding investment agreement with local electric car maker Henan Yujie Times Automobile Co Ltd to acquire 100 percent of the latter through the issuance of new shares.

It is the company's first move after announcing its entry into the new energy vehicle industry earlier this month. It did not disclose the exact amount of the deal.

Yujie, which makes small multi-purpose electric vehicles, says China will reach 10 million small electric vehicles in five years.

Yujie's plant in Henan province, which was established in 2017 and has an annual production capacity of 150,000 vehicles, has what the company calls "a huge production cost advantage.

Two of the company's three small electric vehicles are already in commercial production, and all three models leverage its innovative core technology, it says.

Yujie says it has developed its own control system and core algorithms, and its self-developed standardized battery pack takes three minutes to replace.

In early August, Kaixin Auto said it had decided to set up a new energy vehicle business unit that will include new energy vehicle development, production and marketing teams.

Kaixin Auto said the move is based on steady support from the Chinese government for the rapid growth of the EV industry and the rapid development of the EV industry in China.

Kaixin Auto is in talks with several EV manufacturers about mergers and acquisitions and will announce any significant business deals in a timely manner, the company said.

On March 2, Kaixin Auto said its 100 percent-owned subsidiary of Haitaoche Ltd signed two vehicle sales contracts with third-party customers late last year.

Each customer agreed to buy RMB 500 million ($77 million) of cars from the Haitaoche subsidiary this year, meaning sales would grow at least 20 percent annually for five years.

The total contract value of the two car sales contracts was RMB 7.5 billion.

Kaixin Auto closed down 1.85 percent to $3.19 on Thursday. The stock rose about 88 percent since August 5.

Kaixin Auto announces entry into NEV space, shares soar 30% pre-market

Kaixin Auto to acquire EV maker to speed up its car-making ambitions-CnEVPost