SAIC, which has joint ventures with General Motors Corp and Volkswagen AG, said it will wrap up research and development of a prototype fuel-cell bus by the end of 2006 and hopes 100 units will be produced in 2008.

The company also said it is looking forward to focusing its R&D capability on other energy forms that could be used to replace existing fuels.

Buses using a fuel called dimethyl-ether will start trial operation by the end of the year.

SAIC's two joint ventures, Shanghai GM and Shanghai Volkswagen, are expected to roll out prototypes of hybrid-engine cars to lay the ground work for commercial production in 2007. Hybrid trucks are expected to hit the streets at the same time.

Hastening the development of vehicles that can run on cleaner energy is one of SAIC's key targets for technological innovation in the coming five years.

The other is the making cars based entirely on its own technology.

One day earlier, SAIC announced the establishment of SAIC Motor Manufacturing Co Ltd with an investment of 3.68 billion yuan (US$455 million) at the initial phase. The unit will be in charge of producing self-branded cars with SAIC's own technology.