Montreal has ordered 765 new Metro cars with an option to buy 288 more. (CBC)

Chinese train company Zhuzhou Electric Locomotive Ltd. formally submitted a bid Monday for a large Montreal Metro subway car contract using steel wheels despite a bid requirement for rubber tires.

The company said its proposal valued at around $2 billion would create up to 1,000 local jobs.

Zhuzhou said its plan to use steel wheels rather than rubber tires would save taxpayers $1.5 billion and produce a smoother ride.

The Montreal transit authority has previously advised the firm that its plan to use steel wheels doesn't meet its requirements and that it won't change the product it has operate successfully for more than 40 years.

The Montreal Metro is Canada's second-largest subway system with more than 71 kilometres of track. The Société de transport de Montreal said it wouldn't comment ahead of the afternoon deadline for submissions.

A joint venture between Bombardier Inc. (TSX:BBD.B) and France's Alstom Transport had been in negotiations for the contract before the Quebec and Montreal governments reopened bidding for the enlarged contract after the Chinese company threatened to challenge the previous tender process in court.

The original tender, being negotiated with Bombardier Transportation and Alstom, was for 342 cars. The winning company would now supply up to 1,053 subway cars.

Glen Fisher, Zhuzhou's representative in Canada, was hopeful the transit authority would consider the Chinese bid, which meets the requirement for 60 per cent Canadian content.

It plans to assemble the cars at the former Dominion Bridge plant, where automated trains were built for Toronto's Pearson Airport.

Delivery of the cars could begin within 18 months after the contract is ratified.

In addition to being the most widely used technology around the world, steel-wheel cars would allow the city to save more money should it eventually want to extend the subway system above ground, Fisher said.

Spanish firm also interested

Spain's CAF has said it was interested in the contract based on its experience in rubber-tire systems with projects in Mexico City and Santiago, Chile.

The Spanish firm said it has identified several locations to assemble the subway cars that could also be a base for other Canadian contracts.

Zhuzhou based its proposal on drawings it obtained of Montreal's transit system. The transit authority refused to grant the firm access to the subway to assess the available infrastructure, track and welded rail system in order to prepare a comprehensive proposal.

CSR Zhuzhou Electric Locomotive Company Ltd. was founded in 1936.

In 1958, it developed and manufactured the first main-line electric locomotive in China.