Chinese auto group BYD and German luxury car maker Daimler have received regulatory approval for their joint venture to develop an electric car in China, the companies said Tuesday.

The research and development venture Shenzhen BYD Daimler New Technology Co Ltd was given a business licence nine months after the automakers signed an agreement on the partnership.

"Our joint venture is making excellent progress," said a statement by Wang Chuanfu, chairman of BYD, which stands for "Build Your Dreams".

"We are all eager to utilise the strengths of our two companies to create a new brand of electric car in China."

The new company will get an initial investment of around 600 million yuan ($91 million), Daimler said previously.

The world's oldest automaker and one of the youngest aim to market the vehicle under a new jointly-owned brand, uniting to target China's fast-expanding urban car market.

China overtook the United States in 2009 to become the world's largest car market.

Auto sales in the country rose more than 32 percent last year to a record 18.06 million units as the economy quickly powered out of the financial crisis to grow by 10.3 percent in 2010, the fastest pace since 2007.

BYD, in which US billionaire Warren Buffett holds a stake of 10 percent, has already begun to sell its electric E6 model as a taxi in the southern city of Shenzhen and aims to distribute it in Europe in 2011.