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Honda Motor Co Ltd (7267.T) said on Tuesday its joint venture in China with Guangzhou Automobile Group Co (601238.SS) has begun building an electric vehicle factory in Guangdong province with an initial investment of 3.49 billion yuan ($522 million).

The Japanese automaker is aiming to start the factory’s operation in 2024, it said in a statement. The new factory has an annual production capacity of 120,000 units.

The dedicated EV plant will support Honda’s “core operation” of EV production in China, where competition for battery-driven vehicles is heating up, the company said.

Honda said another EV plant in China, in a joint venture with Dongfeng Motor Group (0489.HK), is also expected to start operations in 2024.

The Japanese automaker projected its annual automobile production capacity in China to increase by about 16% to 1.73 million units in two years.

($1 = 6.6872 yuan)