Two workers replace batteries for an electric vehicle in Jinhua, Zhejiang province. Xu Yu / Xinhua

Fires in vehicles and the high price of energy storage technology have hampered the market for batteries powering electric vehicles.

But that is not stopping Tianneng Group, Chinese largest battery manufacturer, from investing in a market expected to be worth more than 200 billion yuan within a few years.

Zhang Tianren, chairman of Tianneng Group, the first battery company listed on the Hong Kong Stock exchange in 2007, is betting that more Chinese will be flocking to low-speed electric vehicles and using its batteries for driving in small cities and the rural-urban fringe.

Tianneng, with annual sales of 38 billion yuan ($5.35 billion) in 2012, has made the lead-acid and lithium ion batteries a target for growth.

"People living in third - or even fourth-tier cities and those in rural areas generally can't afford a regular car, but they still need to commute to work or take their children to school, so what should they do?" Zhang said. "Low-speed vehicles will be their solution."

With a price range of 30,000 to 50,000 yuan, low-speed electric vehicles have a strong presence in China, although most of them are produced by private carmakers without a government license. As a result, they are not recognized as new-energy cars.

China, the world's largest energy consumer, is embracing the electric vehicle industry, which could help it not only reduce fossil fuel consumption but also to build a car industry that could leapfrog its global competitors in this emerging sector.

The Ministry of Finance announced in September that it will extend a program of subsidies for buyers of electric-powered vehicles after the current subsidy regime, part of an effort to combat pollution in cities, expires in 2015.

The subsidies were designed to help China meet a goal of putting a half-million new-energy vehicles on the road by 2015 and 5 million by 2020.

But currently there are only 20,000 to 30,000 electric cars hitting the road, far from the government's target.