Mercedes adds assembly of battery-powered SUVs to Ala. plant

The pressure is on for Mercedes-Benz to complete the $1 billion expansion of its Vance, Ala., assembly plant now that the automaker has announced specifics of the electric vehicle production that will begin there in 2022.

Mercedes-Benz will produce battery-powered versions of its popular GLS and GLE utility vehicles at the site, currently the global production center for the two internal-combustion models.

U.S. production of the electric EQS SUV is expected to begin in June 2022, while assembly of the EQE crossover will start in October of that year, according to AutoForecast Solutions. Mercedes could build about 40,000 of each electric model in its first full year of U.S. production.

Electric vehicle production will be integrated into the Alabama factory's existing body shop, paint shop and assembly lines. Construction also is underway on an off-site battery assembly plant on 270 acres nearby.

Because they are utility vehicles, the new EQS and EQE are critical to the U.S. market, where light trucks account for 75 percent of total vehicle sales.

AutoPacific analyst Ed Kim said fewer American consumers want luxury sedans, so Mercedes must offer its EVs in the body styles that people want most.

"Today, that means luxury SUVs. Offering electric luxury SUVs will speak to American consumers," Kim said. But he added, "electric luxury sedans will be critical to Mercedes- Benz's success with its EQ lineup in China."

The GLS, Mercedes' largest utility model in the U.S. market, also is a profit generator for the brand. The GLE was the second-bestselling Mercedes model in the first nine months of the year.

While Tesla dominates the electric vehicle market today, Mercedes will have to contend with a wave of competition from traditional rivals, such as BMW, Audi and Porsche.

The new electric Mercedes models serve dual goals, said Sam Fiorani, vice president at AutoForecast Solutions.

"Mercedes hopes the EQE and EQS utilities will take a significant bite out of the electric vehicle and luxury vehicle markets simultaneously," Fiorani said. "The models offer luxury buyers the choice of size and price while giving Mercedes a chance to profit on EVs where others have lost money."

Getting the EQ subbrand to market is the cornerstone of Mercedes' campaign to embrace electrification to meet stringent emissions targets, primarily in Europe and China. Plug-in hybrids and full-electric vehicles should account for more than half of Mercedes' sales by 2030.

The first EQ model scheduled for the U.S. market is the battery-powered version of Mercedes' large sedan, the S-Class. The electric version of the sedan, to be built in Sindelfingen, Germany, will arrive in U.S. dealerships next summer.

Mercedes planned to launch the EQ subbrand in the U.S. with the EQC compact crossover this year, but that has been delayed. Mercedes declined to say when the EQC is scheduled to arrive stateside.

Last week, Mercedes also offered production timelines for other EQ models:

• The EQA crossover will be built in Beijing next year. Production of the SUV is underway in Rastatt, Germany.
• The EQB crossover will start production in Kecskemet, Hungary, and Beijing next year.
• The EQE sedan will be produced in Bremen, Germany, in 2021 and in Beijing soon thereafter.

Mercedes also is bringing electrification to its commercial-vehicle lineup. This month, the automaker confirmed it will bring the next generation of its eSprinter van to the U.S. It will be built on a new EV platform and be offered in two wheelbase sizes and with three battery options.