Daimler to Invest $1 Billion in Alabama Plant -- Update
21 September 2017 - 5:29PM
Dow Jones News
By Chester Dawson
TUSCALOOSA, Ala. -- Daimler AG said Thursday it will invest $1
billion in its Alabama manufacturing operations and start
production of a fully electric sport-utility vehicle, a move that
comes as the German auto maker expands its U.S. footprint and
global electrification drive.
The expansion in the U.S. is part of a global push into electric
vehicles and follows its announcement in July to build a battery
assembly facility in China. The company plans to offer more than 50
fully or partly electric vehicles globally, and by 2022 offer
electrified options for its Mercedes brand lineup.
"We live now in a phase of major changes in the industry,"
Markus Schäfer, a Daimler board member in charge of Mercedes'
production and supply chain, said in an interview. "We are leading
at the moment in our [luxury vehicle] segment, but we see clearly
there are new players coming that are potential competitors to
us."
Daimler said it will begin production of an electric SUV early
next decade at its Tuscaloosa plant and begin construction next
year of a nearby facility to assemble battery systems for use in
those and other vehicles. Combined, the new plans are expected to
add as many as 600 new jobs, it said.
The new SUV will be sold under the Mercedes-Benz EQ electric
vehicle subbrand, but the company didn't specify its size or engine
displacement.
German auto makers are moving rapidly toward electrification as
demand for their trademark diesel technology has slumped recently
in Europe.
The bullish billion-dollar bet by Daimler is part of a wave of
investments planned by foreign auto makers despite weakening U.S.
sales volumes in recent months and widespread expectations for
further declines.
Earlier this week, Chinese-owned Volvo said it would double its
investment in its first U.S. plant in Charleston, S.C. to a total
of $1 billion. That followed an announcement last month by Toyota
Motor Corp. and Mazda Motor Corp t o jointly build a new $1.6
billion plant in the U.S. and a commitment by BMW AG in June to
spend $600 million at its Spartanburg, S.C., factory.
At the same time, the Detroit Big Three auto makers have been
dialing back production at some North American plants this year
and, in some cases cutting shifts or entire product lines.
Ford Motor Co. said this week it would temporarily suspend
production at three U.S. factories and two Mexican plants. General
Motors Co. has cut shifts at certain plants in the U.S., and Fiat
Chrysler Automobiles NV has exited production of all but a handful
of sedans and will shut down a Canadian plant making its flagship
minivan for five weeks this fall.
Daimler's investment comes on top of the $5.8 billion it already
has invested on its Tuscaloosa operations, which began production
in 1997. Last year, the plant produced more than 310,000 Mercedes
vehicles, including mid-SUVs as well as entry-level C-Class sedans.
The company has reduced output of those sedans in order to ramp up
production of SUVs, Mr. Schäfer said.
"We see a global trend toward SUVs" from sedans, he said.
More than 70% of the SUVs manufactured at the Alabama plant are
exported to global markets such as China. Daimler said some of the
new EQ SUV production will also be exported.
The auto maker plans to outsource production of the lithium-ion
battery cells it uses, but assemble the cooling systems and other
parts for electric powertrains at the new facility in Alabama. The
battery factory will be one of five such plants world-wide,
including three in Germany and one under construction in China.
In addition to upgrades to its existing production line and the
battery subassembly plant, Daimler also plans to build a logistics
hub for exporting so-called knockdown kits of vehicles for final
assembly in other markets, such as Russia and Southeast Asia. The
company is aiming to ship kits from Alabama totaling about 20,000
vehicles a year, Mr. Schäfer said.
Write to Chester Dawson at chester.dawson@wsj.com
(END) Dow Jones Newswires
September 21, 2017 12:14 ET (16:14 GMT)
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