HANGZHOU - Two leading car makers across the Taiwan Strait established a joint venture Tuesday in East China's Zhejiang province.

Dongfeng Motor, a leading auto maker in the Chinese mainland, and Yulong Motor in Taiwan, have jointly invested 3.4 billion yuan ($510 million) to build Dongfeng-Yulong Motor Co based in Hangzhou city, capital of Zhejiang, said Zhou Wenjie, the joint venture's chairman.

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Each of the two investors holds a 50 percent stake in the venture, he added.

The new company, with a research center and manufacturing plant, is designed to produce 240,000 vehicles in the near future. It will produce sports vehicles, multi-functional passenger cars, sedans and electric vehicles, Zhou said.

This is the largest cooperation project between companies across the Strait after the Economic Cooperation Framework Agreement (ECFA) took effect on Sept 12.

A total of 33 auto parts are among the 539 made-in-Taiwan products which have had their export tariffs to the Chinese mainland reduced under ECFA. More than 30 auto part suppliers have set up branches near the joint venture.