UPDATE 2-Exiled China tycoon in US clean car venture-source

* Exiled Chinese tycoon Yang Rong to return to car business

* To announce late this month car production in U.S.

* To create thousands of jobs in Alabama (Adds remarks from industry consultant)

By George Chen and David Bailey

HONG KONG/DETROIT, July 9 (Reuters) - Yang Rong, a Chinese automobile tycoon who fled the country after being accused of economic crimes, is preparing to launch an ambitious plan to make clean-tech cars in the United States, said a source.

The former chairman of Brilliance China Automotive Holdings Ltd (1114.HK), ranked by Forbes as China's third-richest man in 2001, will announce a plan later this month to set up a company in the southern U.S. state of Alabama, said the source with direct knowledge of the plan.

Yang could not be immediately reached for comment.

Support for the plan had come from former U.S. Vice President Al Gore, one of the world's most visible environmental activists and now a partner at U.S. venture capital firm Kleiner Perkins Caufield & Byers, said the source, declining to be more specific.

A spokeswoman for Gore said he was not immediately available to comment.

Yang's plans to return to the auto industry after fleeing to the United States in late 2002 first emerged in various Chinese media reports, which did not provide details.

Now living in California, he has hired a former senior executive of top U.S. carmaker General Motors Corp GMGMQ.PK to run the firm's daily operations, said the source.

The firm is also seeking financial support from the U.S. Department of Energy, which is in charge of a mega-sized fund to support environmentally friendly energy projects, the source said.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan, said such a venture could cost billions of dollars and would run headlong into tough competition.

"Until there is more detail, it is really hard to know," Cole said. "But I would still say good luck, because it is a very formidable task, particularly in the competitive market that already exists, and will be very much developing around the so-called clean cars."

SWEET HOME ALABAMA

Yang will cooperate with the Alabama state government on the project, expected to create thousands of jobs in its initial phase, the source said, speaking on condition of anonymity as the source was not authorized to speak to the media.

"The Alabama government definitely welcomes the plan as the new firm, which owns big land in the state, will build a plant there and hire local workers," the source said.

Alabama economic development officials had no comment.

Yang was China's most influential carmaker at one time as he helped transform Brilliance from a stagnant state-owned auto factory into a top maker of mini-vans in the country.

Brilliance later became a household brand and a manufacturing partner of German carmaker BMW (BMWG.DE) in China.

Yang's new company will manufacture cars in Alabama, with plans to sell them nationwide, while it also seeks partners in China where the tycoon hopes to produce cars for local consumers, said the source.

"All cars made in the U.S. will be sold in the U.S. and the firm will also make cars in China and sell cars to Chinese consumers, but key technologies will be definitely controlled by people in the U.S.," said the source.

However, the source acknowledged that Yang's politically sensitive background might lead to legal challenges for the firm's China plans because the government has not cleared his case. (Editing by Jacqueline Wong and Andre Grenon)