Wolfsburg, Germany  - Volkswagen and the Chinese car maker BYD (Build Your Dreams) have signed a memorandum of understanding on building hybrid and electric vehicles powered by lithium batteries, according to a VW statement.

"Hybrids and electric vehicles will play an increasingly important role, particularly for the Chinese market," said Dr Ulrich Hackenberg, board member for technical development at Volkswagen.

Earlier BYD's CEO Wang Chuanfu and a delegation of top Chinese managers visited the VW technology centre and tested at the Wolfsburg test track various prototypes including the VW Golf Twindrive fitted with a 75 kW/102 hp diesel engine and three electric motors.  (dpa)