The battle will be between electricity and hydrogen as China strives to lower pollution through zero-emission vehicles.

German carmakers Volkswagen, BMW and Daimler are betting on electric cars, while Toyota and Honda have both placed their money on hydrogen fuel-celled vehicles. The auto giants all unveiled new models this week, Reuters reported.

This year, China expanded the definition of green energy cars to allow for fuel cell vehicles. The two energy concepts have the industry at odds.

The hydrogen vehicles from the Japanese brands will hit dealerships in 2015. Toyota and Honda decided not to go with electric technology, believing it would not be powerful enough.

The Volkswagen umbrella, including Volkswagen and Audi, will launch at least 15 plug-in cars by 2018. The Wolfsburg, Germany-based company plans to build many of the vehicles locally.

"We forecast high volumes in this area," Jochem Heizmann, head of Volkswagen Group China, told reporters this week.

While fuel cell cars can run five times longer than all-electric vehicles, they're more expensive. Hydrogen models also need to stop at refilling stations, but electric cars can be recharged at home. Coming in at $6 million each, hydrogen stations are expensive to build and are scarce in China's crowded cities.

Nissan plans to begin selling a locally built electric car in China in 2014. Some say China, which has struggled with smog especially in its major cities, is too focused on plug-ins to fix the problem.

"Toyota believes the industry isn't likely to come up with breakthroughs to make all-electric cars a viable solution any time soon," said Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight. "Unlike China, some countries have taken a more flexible approach, rather than setting the path on one solution too early."

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