Chinese automaker Dongfeng Motor on Monday entered into a deal with the owner of Swedish auto brand Saab to develop new-energy vehicles.

Dongfeng and National Electric Vehicle Sweden AB (NEVS), which bought Saab Automobile in 2012, will collaborate on pure electric and extended-range electric vehicle research.

Dongfeng will support the construction of NEVS R&D and production bases in Tianjin by sharing its local expertise of suppliers, dealers and auto production.

NEVS will help with Dongfeng's own brands meet European legal and technical requirements, and aid Dongfeng access major auto markets around the world.

Based in central China's Hubei Province, Dongfeng is a state-owned commercial and passenger vehicle enterprise, it also deals in auto parts and vehicle manufacturing equipment.

The company's Shanghai-listed share surged by the daily limit of 10 percent on Monday.

China's production and sales of new energy vehicles saw explosive growth this year following government incentives, including subsidies, tax cuts and discounts.

In the first seven months, Chinese automakers made 95,530 new-energy vehicles, up 250 percent from a year earlier, while sales surged 260 percent to 89,549 vehicles.