(Bloomberg) — Mercedes-Benz Group AG is opening a battery facility in Alabama this week as it broadens its electric rollout with two new luxury SUVs, the company’s latest move to challenge Tesla Inc.’s grip on battery-powered cars in the U.S.
The German carmaker, which aims to go fully electric by the end of the decade, will make lithium-ion batteries at the new Bibb County plant and also start producing its all-electric EQS and EQE models at its existing factory there, it said Tuesday.
Mercedes has vowed to defend its turf with an accelerated 40 billion euro ($43.8 billion) spending plan. The company said it invested more than $1 billion in the Alabama battery plant, logistic centers and upgrades to the production line to make EVs.
“The opening of our new battery plant in Alabama is a major milestone on our way to going all-electric,” Chief Executive Officer Ola Kallenius said in a statement.
The battery system for the EQS SUV has a similar modular design already seen in the EQS sedan, the S-Class’s electric sibling, which boasts an industry-leading driving range. The technology relies primarily on nickel, cobalt and manganese, the company said.
As carmakers plough on with shift into electric cars, the surge in raw material costs and persistent supply-chain problems are adding to pressures for the industry. BMW AG, which so far has been better able to navigate the persistent shortage of semiconductors, last year overtook Mercedes for the first time in sales since 2015.
Mercedes said last month said it expects profitability at its main cars division to slip this year. Kallenius is intensifying efforts to have battery-powered models in all its segments this year.
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