With Chinese cities sputtering under the smog of modernity, eco-friendly electric vehicles are one option municipalities are turning to for cleaner air.

California-based electric vehicle and battery developer Balqon Corporation has entered into a joint development agreement with Sichuan Automobile Industry Company Ltd. to manufacture city electric buses. Under this Agreement, SAIG purchased the Balqon electric drive system for integration into a 22-foot bus chassis.

The agreement includes purchase of Balqon's electric drive system, featuring its proprietary ZEVQON Flux Vector AC controller, and HIQAP high-energy lithium batteries. Both companies will provide engineering resources for integration, testing and certification of the product for on-road use in China and North America.

Sichuan Automobile Industry Company Ltd. is a subsidiary of Fulin Group which claims to own and operate over 5,000 diesel city buses in western China and is recently recipient of several grants from the Chinese government to produce low emission vehicles.

Financial terms of this deal have not been released.