Ford is to start building its iconic Mustang cars in China for the first time.

The US carmaker said its Mustang Mach-E will start being produced there later this year as it looks to tap into China’s electric vehicle (EV) market.

Earlier this month, Tesla started delivering its Model Y to Chinese customers from its Shanghai factory.

Western brands are aggressively targeting China, where EV sales are expected to grow strongly.

Volkswagen said it would soon begin delivering vehicles produced at two newly-built Chinese factories dedicated to electric cars.

China is the world’s biggest car market with more than 20m vehicles sold each year.

Germany’s Daimler posted strong company results for 2020, off the back of a strong recovery in the global car market led by China.

Daimler boss Ola Källenius hailed the company’s rebound in China as almost “too good to be true”.

Ford is also hoping to capitalize on China’s economic recovery and the Chinese government’s push for more electric cars on its roads.

The new electric-powered Mustang is a sports utility vehicle (SUV), seen as a chance to reverse years of sluggish sales in China and connect with customers by producing them locally.

Mustang sports cars have so far only been available in China as costly imports.

Ford launched its first made-in-China Lincoln vehicles in March last year, but the brand remains a minor player in the Chinese market compared with its premium rivals.

In 2019, it launched “Ford China 2.0,” a strategy that promised more products tailored to local tastes.