Mercedes Expands Its Electric Car Plans For US And Chinese Markets

Mercedes is boosting its electric car investments in America and in China, reports Fortune. In the US, it builds the GLE and GLS SUV models and the GLE coupe at a factory near Tuscaloosa, Alabama. Earlier this year, it announced it would spend $1.3 billion to expand and modernize that facility, which built 310,000 vehicles in 2016.

Now Mercedes says it will invest a further $1 billion to make the Tuscaloosa plant ready to build electric cars and to build a battery factory nearby. The one million square foot battery manufacturing facility will be the fifth constructed by Mercedes worldwide. The plan is to begin the battery plant in 2018 with a target date for the start of production in 2020. The company says the expansion will create 600 new jobs in the area.

Manufacturing of electric cars, which will be sold under the EQ brand, is not expected to begin until 2021 at the earliest. While the new investment in America can be seen as a response to the growing demand for Tesla automobiles, the California company says it will have its own midsize electric SUV — the Model Y — on sale by 2020. Mercedes will begin producing its first electric SUV, the EQC, at its factory in Bremen, Germany, in 2019. Mercedes says all its cars will have an electric motor by 2022 — although, that statement includes hybrid and plug-in hybrid models as well as battery electric vehicles.

At the same time, Mercedes and BYD are looking to expand their partnership, which builds electric cars for the Chinese market under the Denza brand according to a report by Bloomberg. The two companies have been working together since 2012. BYD, partially backed by Warren Buffett, is currently China’s electric car sales leader. It has delivered nearly 50,000 EVs so far this year while General Motors has delivered fewer than 1,000.

China is pushing hard to convert its fleet of automobiles to electrics by 2030. It currently has the most rigorous EV quota system in the world. While the automakers all agree that China’s timetable for going all electric is far too aggressive, the fact is that China’s new car market — at nearly 25 million vehicles a year — is simply too large and too lucrative to give up on.

As China goes, so will the rest of the world go. Carmakers will need to spread the development costs of electric cars across all markets in order to continue being profitable in the future when electric cars go mainstream.