Kia Motors Corp., South Korea’s second largest car maker, will transform its first factory in China into a plant that produces electric vehicles only as part of its restructuring plan.

Dongfeng Yueda Kia Motors Co., a joint venture founded in 2002 in China based on 50 percent investment from Kia Motors and 25 percent each from Chinese peers Dongfeng Motor Group and Jiangsu Yueda Group Co., announced on Weibo on Wednesday that its first factory in Yancheng in Jiangsu Province will halt production of Kia Motors’ vehicles and will be converted into an electric car-exclusive plant that will be managed by Yueda Group.

The plan is part of production streamlining along with its bigger sibling Hyundai Motor Co. as their manufacturing plants in China have been running at low utilization rates due to poor sales, according to the company. The Yancheng factory has been running at a utilization rate in the 40 percent range after Kia Motors’ car shipments plummeted to 370,000 units last year from 480,000 units in 2012.

Dongfeng Yueda Kia Motors said that the latest decision is also part of the company’s efforts to meet the Chinese government’s new guidelines for the automotive industry with more focus on future mobility technologies to develop electric, connected, and intelligent cars. The Yancheng city government also announced its plan to foster the development of vehicles running on alternative energy sources, a core part of a smart city it is also planning to build.

To encourage the automotive industry to follow the new policy guidelines aimed at proliferation of new energy vehicles such as electric and hydrogen-powered cars, Beijing this year introduced a dual-credits system in which a carmaker whose oil energy consumption is lower than the national standard will receive more points, but those with higher oil energy use would lose points. More credits are added to new energy vehicles with a longer driving range per single charge, too. When a carmaker’s total points are below zero, it will have to increase production of new energy vehicles or purchase credits from other carmakers.

With a plant dedicated to the production of electric vehicles, Kia Motors would be able to gain more credits under the Chinese government’s dual-points scheme.

The Yancheng factory – which is capable of producing 140,000 cars per year – manufactures Kia Motors’ Sportage sport utility vehicle and a China-exclusive KX7 model. Production and employees would be realigned to the joint venture’s second and third plants in China upon the latest decision.

By Lee Jae-cheol and Lee Eun-joo

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