Mercedes takes on Tesla with new U.S. battery plant, electric SUV

TUSCALOOSA, Ala. (Reuters) – Mercedes-Benz AG opened its first U.S. electric vehicle (EV) battery factory on Tuesday and said Japanese battery maker Envision AESC would supply battery modules for U.S.-made Mercedes EVs from a new U.S. plant by the middle of the decade.

Alongside the launch of its Bibb County, Alabama battery plant, Mercedes also previewed a large electric SUV to be built at the nearby Tuscaloosa, Alabama assembly facility this year.

The EQS SUV and a smaller EQE electric SUV, also to be made in Alabama, join a growing line-up of electric SUVs seeking to challenge Tesla (NASDAQ:TSLA) in the United States, China and Europe.

The battery plant, which will employ 600 workers, and the assembly facility are part of a 40 billion euro ($44 billion) drive by Mercedes to go all electric by 2030, where markets allow.

Mercedes, which plans to produce EV batteries in Europe, North America and Asia, aims to have eight cell factories with partners around the world with capacity to produce 200 gigawatt hours a year by the end of the decade.

Mercedes Chief Executive Ola Kaellenius and other executives were in Alabama on Tuesday to open the new battery factory.

Kaellenius is trying to accelerate the shift by Mercedes from combustion technology company to a firm whose products do not emit carbon and rely on software and computing power.

Rocketing gasoline prices since Russia’s invasion of Ukraine has amplified the challenges for established automakers that still rely on fossil fuel-powered vehicles for profits.

Mercedes and other established automakers trail Tesla in EV sales and in developing computer and software systems to compete with the U.S. firm’s stream of new features and updates.

The Mercedes Alabama assembly plant, which turns 25 this year, can build both electric and combustion vehicles, and is one of the largest Mercedes vehicle-making plants in the world.

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