Construction of the plant – which will have annual capacity of 150,000 vehicles – will start in June in the commercial hub Shanghai, GM China said in a statement to AFP.
It will be run by Shanghai GM, a joint venture with China’s SAIC Motor.
“Shanghai GM has received the NDRC’s (National Development and Reform Commission’s) approval to build a Cadillac plant,” the statement said.
The huge investment marks a bet that GM, the largest US auto maker, will be able to win a larger share of China’s rapidly-growing luxury vehicle market, in which German brands hold an estimated 80 percent share.
Analysts say GM is a laggard in the luxury segment, one of China’s fastest growing and most profitable, given rising incomes in the country.
GM launched a Cadillac sedan, the XTS, in China earlier this year as it seeks to make inroads into the sector.
The company plans to introduce one new Cadillac model a year through 2016 to boost annual sales of the marque from 30,000 vehicles last year to 100,000 by 2015, a top GM official said last month.
“Our longer-term goal is to take Cadillac’s share of the luxury car market to 10 percent by 2020,” GM China president Bob Socia said.
GM’s total China sales rose 11.3 percent last year to a record 2.84 million vehicles, according to the company.
China’s market for “premium” cars – costing up to $190,000 – was 1.25 million vehicles last year, second only to the United States, according to consultancy McKinsey.