Mercedes says Asian supplier to build U.S. battery plant for EV production in Ala.

VANCE, Ala. — Mercedes-Benz on Tuesday said that Japan-based battery technology giant Envision AESC would supply it with vehicle batteries from a new U.S. plant starting mid-decade.

Mercedes is putting together the pieces it needs to launch electric vehicle production at its 6-million-square-foot assembly plant 40 miles southwest of Birmingham, Ala.

U.S. production of the electric EQS SUV should begin in June, while assembly of the EQE crossover will start next October, according to AutoForecast Solutions. Once production ramps up, the factory is expected to churn out 6,000 EVs a month.

Mercedes did not disclose the location or production capacity of Envision's new U.S. factory. But it will be fundamental to Mercedes' EV manufacturing in this key market.

"Envision AESC will be a major supplier securing capacity for the next generations of our Mercedes-EQ products built in the U.S. in the years to come," Mercedes-Benz Chief Technology Officer Markus Schaefer said in a statement. "This new cooperation ... allows us to secure supplies, to take advantage of economies of scale and to provide our customers with superior battery technology."

Envision also supplies batteries for Nissan's U.S.-made Leaf hatchback from a plant in Smyrna, Tenn. That factory was initially built and owned by Nissan, with plans to supply as many as 150,000 vehicles a year. But Nissan's early plans for EV adoption did not materialize.

AutoForecast estimates that the Smyrna battery plant can supply 30,000 to 50,000 battery packs.

China's Envision Group acquired an 80 percent interest in the battery technology company in 2018, but Nissan retains a 20 percent stake and it remains headquartered in Yokohama, Japan.

Mercedes on Tuesday also flipped the switch on a 177,000-square-foot battery assembly plant located on 270 acres near its vehicle factory.

It's an essential investment in the German luxury automaker's ambition to retain its luxury-segment leadership position in the electric age.

Daimler plans to invest more than $46 billion from 2022 to 2030 to develop EVs and become an all-electric brand in markets ready for the switch.

Mercedes-Benz production boss Jörg Burzer described the battery plant as "a crucial driver of our electric vehicle rollout plan."

The battery pack facility sets the stage for EV production at the automaker's sprawling vehicle assembly plant.

The battery assembly plant will employ up to 600 workers and is part of Mercedes' $1 billion investment to start EV production and expand the plant's logistics capacity.

Mercedes has developed a next-generation battery that the automaker said is more energy-dense and faster charging. It's also greener, featuring new cell chemistry that reduces the cobalt content to 10 percent.

The high-performance lithium ion batteries are assembled into a pack on a production line about 984 feet long with more than 70 workstations at the new battery plant.

Mercedes is developing a network of battery assembly plants on three continents to supply its EVs. Those factories will supply local vehicle production and, if necessary, are ready for export.

Mercedes will also build, alongside battery suppliers, eight cell factories worldwide with a production capacity of 200 gigawatt-hours by the end of the decade.

Mercedes' U.S. factory brought major auto manufacturing to Alabama in 1997. Since then, it has churned out 4 million vehicles and lured a constellation of suppliers to the state.

The assembly plant has an annual production capacity of 305,000 vehicles and exports about two-thirds of the utility vehicles it builds.

The factory is now on the cusp of transformation as it creates a new ecosystem of battery suppliers and EV parts makers. It is one of seven Mercedes plants that will churn out a fleet of battery-electric vehicles on three continents.

The Alabama plant will build gasoline-powered versions of the GLE and GLS alongside the battery-electric variants. EV production will integrate into the plant's existing body and paint shop and assembly lines.

Mercedes eschews building EV-only plants, instead keeping its production lines flexible to match market demand.

"The global Mercedes-Benz production network is digital, sustainable, efficient and flexible," Burzer said in a statement.