The La Liga club’s director of institutional relations, Emilio Butragueño, attended a ceremony in Tianjin to announce the deal.
"We are very satisfied to present the first sponsorship contract in Real Madrid's history that has been signed in China. And it is an honour that it is with Luyuan,” said Butragueño.
Ni Jie, president of Luyuan, added: “It is an important year when Luyuan is signing a collaboration agreement with the most prestigious club in the world. It is an honour to be Real Madrid's first sponsor in China.
“Football and electric vehicles have things in common such as being green, healthy, looking after the environment and being close to the wider public.”