Daimler announces $1.8 billion investment to produce Mercedes EQ-branded electric vehicles in China

China keeps securing electric vehicle investments from foreign automakers and the latest is coming from Daimler.

The German automaker confirms a deal with BAIC to expand local production for the Mercedes-Benz brand, which will include the highly anticipated Mercedes EQ all-electric vehicles.

Daimler is building on its joint-venture with BAIC, a Chinese state-owned company and one of the biggest automakers in the country.

The automaker has one of the most aggressive electrification plans amongst established automakers. They plan for Mercedes-Benz and smart cars to offer electric versions of all car models by 2022.

Mercedes-Benz’s broader EV effort will start next year with the first vehicles, the all-electric ‘EQC’ SUV, under their new all-electric ‘EQ’ sub-brand.

China is a big part of their EV plans. Last year, they announced a new $740 million battery factory in the country and they showed that an EV factory is part of their aggressive electric vehicle production plan unveiled last month.

Now, they confirmed plans to “invest 11.9 billion RMB (about 1.5 billion euros) to operate another production location.”

Hubertus Troska, Daimler executive responsible for Greater China, commented on the announcement:

“Local production is a strong pillar of our sustainable development in China. By deepening our cooperation with our local partner BAIC, BBAC will continue playing a key role for Mercedes-Benz in China. This production capacity expansion for BBAC will allow us to meet the expected growing demand for premium passenger cars in China, including for electric vehicles.”

While it doesn’t sound like the expansion will be solely for EVs, it does suggest that it’s an important part of the plan.

Markus Schäfer, Production and Supply Chain Executive for Mercedes-Benz Cars, added:

“In 2017, Mercedes-Benz Cars has set the seventh production record in a row, also thanks to our strong growth in China. Globally, our plants run at full capacity, which is why we need further production facilities around the globe. BBAC is an integral part of our global production network of Mercedes-Benz Cars. With the new production location and our battery production planned in Beijing, we are progressing well with our electric initiative.”

It seems to be another example of China’s zero-emission mandate, which requires zero-emission vehicles (ZEV’s) to represent at least 10% of an automaker’s new car sales as soon as next year. The initiative resulted in several important expansions of electric vehicle production capacity in the country over the last year and now Mercedes EQ electric vehicles will also be produced in China.