Daimler will be selling all-electric vehicles with the Mercedes brand in China to tap into the government’s campaign for increasing sales of what it calls “new energy vehicles.”

Mercedes-Benz China chief Hubertus Troska said parent company Daimler is “very confident NEVs will be an important factor of the Chinese market.”

In an interview with Reuters, Troska said that tax breaks and other government policy support have helped the number of NEVs surpass 300,000 units sold in China last year. China has become the world’s largest market for plug-in electrified vehicles (both all-electric and plug-in hybrid) and other such clean vehicles.

Troska did not provide details on the planned PEVs such as cost, pricing, models or launch dates while interviewed at an analyst and investor conference in Beijing. Investor relations head Björn Scheib did say that Daimler plans to show a concept electric car at the upcoming Paris Motor Show.

Pricing appears to be a concern for Daimler. Troska acknowledged that the majority of the PEVs sold in China have been priced under 250,000 yuan ($37,515). The challenge will be there for foreign carmakers. Troska also mentioned that most PEVs sold in the China market have come from domestic automakers.

More expensive and capable PEVs will increase in demand over time, according to Troska. He sees demand over time shifting toward a “higher segment” at a later point in time.

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Daimler and other luxury carmakers will be watching to see the role Tesla Motors will play in the Chinese market. That will include its sales, which have been strong in Hong Kong, along with Tesla’s planned factory in that country.

For now, government policies have been the deciding factor for Daimler. The government has been pushing hard for cleaning up the country’s oil dependence and air pollution.

“Mercedes-Benz is also going to play a role in China in NEVs,” Troska said, referring to the planned PEVs.

NEVs will not be entirely new for Daimler in that market. The German automaker sells an all-electric Smart car in China, and has an alliance with BYD co. to sell another electric car under the Denza brand. The company also offers plug-in hybrid versions of the Mercedes-Benz C-class and S-class sedans and GLE crossover SUVs in that country.