China's largest air conditioner manufacturer is jumping on the electric vehicle bandwagon having agreed to pay 13 billion yuan ($2 billion) to acquire an automaker in Guangdong province.

Gree Electric Appliances Inc will fund the takeover of Zhuhai Yinlong New Energy Co by selling 834.9 million new shares at 15.57 yuan apiece, about 19 percent lower than the stock's last traded price, according to its filing to the Shenzhen stock exchange on Aug 18.

Gree shares have been halted from trading since Feb 22 "because of a possible important takeover". Its shares will remain suspended until after the Shenzhen stock exchange and other government agencies review and approve the acquisition, the appliance maker said in a statement on Aug 18.

Established in 2004, Yinlong started making inroads into the new energy sector in 2009. The company sold 3,189 electric buses in 2015, seizing a 3.6 percent market share in China.

It has a lineup of seven electric passenger cars and 18 electric buses, according to its website, and also manufactures lithium-ion batteries as well as controller systems for electric vehicles.

Gree's President Dong Mingzhu has long made public that the company plans to produce electric cars as part of its strategy to diversify its business interests.

She told China Daily earlier this year that Gree's business activities will range from its core air conditioners and white goods to smartphones, new energy vehicles and intelligent equipment.

The company launched its second generation of smartphones in June, after an almost year-long trial operation of its first batch, which were only sold to employees for testing purposes.

Auto industry analysts believe Gree's foray into the electric car making sector is mainly a result of the favorable policies, including subsidies, that have been introduced to promote and develop the sector.

China, already the largest new energy vehicle market in the world, plans to put 5 million such vehicles on its road by 2020.

Some reports, however, have suggested that Gree's takeover is aimed more at Yinlong's battery technology than its cars.

Dong revealed in March that Gree is developing new products that would serve air conditioners and generate electricity for home appliances under the same roof, reported the Automotive Business Review magazine.

The report said such products would require electricity generation and storage technologies, which Yinlong has specialized in.

Gree also released its mid-year financial report on Thursday. Its net profit rose 12 percent to 6.4 billion yuan in the first half of the year while its revenue slipped 1.85 percent to 49.2 billion yuan.

Its revenue slumped nearly a third to 99.8 billion yuan in 2015, the company's first annual sales decline on record.