With Chrysler and GM out of the running, China is vying to become the world leader in hybrid and electric vehicles.

The New York Times reports that China is aiming for a production capacity of 500,000 hybrid or all-electric vehicles a year by 2011 – outnumbering the amount of eco-friendly vehicles the U.S. and Japan will be able to put on the roads in the same time frame.

China, who gets three-fourths of its electricity from coal, is offering subsidies for taxi companies and municipalities that switch to electric or hybrid vehicles. The government has also ordered construction of electric-vehicle charging stations for Beijing, Shanghai and Tianjin, the Times reported.

Just think – you could be headed to Wal-Mart of Costco for your next electric car purchase. That’s the way industry discussions have been heading for Chinese-designed and Mexican-built vehicles.

Kathleen Ligocki, the CEO of Mexico-based GS Motors has sparked talk of Chinese electric cars being sold in big-box discount stores in the U.S., telling the Web site Hybrid Cars that she thinks the States is ready to follow Mexico’s business model. GS Motors sold 4,000 Chinese-made vehicles in Mexico last year through big-box superstores. Ligocki thinks the U.S. industry will follow Mexico’s lead in selling the vehicles through retailers such as Wal-Mart, which has made sustainability one of their priorities in the past year.

GS is reportedly building an assembly plant  with the China-based FAW Group, in Michoacan, Mexico. They have formed joint ventures with automobile giants such as Volkswagen, Toyota and Mazda, with plans to begin selling FAW’s $5,500 F1 Hatchback this year. Production from the Michoacan line is slated for 2010.