Methanol can be produced through a coal gasification process. A company spokesman confirmed the vehicle assembly project to Automotive News China without providing further details.

But according to the Shanxi Evening News, Geely's Jinzhong plant will be able to assemble 100,000 methanol-powered cars a year.

The assembly plant that produces the cars also will build the methanol-powered engines, the newspaper reported.

Geely, which acquired Volvo Car Corp. from Ford last year, sold 415,300 own-brand vehicles in 2010, up 27 percent from 2009.

Currently all vehicles in Geely's lineup are gasoline-powered models.