Mercedes-Benz Spending $1 Billion to Build All-electric SUVs in, Where Else, Alabama

Mercedes-Benz is investing $1 billion into its Tuscaloosa, Alabama, assembly operations in order to facilitate the production of its first EQ-branded SUVs in 2020. The investment, timed to roughly coincide with the beginning of Mercedes-Benz ML production in Alabama, is expected to result in the hiring of another 600 employees.

In the near term, Mercedes-Benz has been open with its doubts regarding the profitability of pure electric vehicles. Evidently, the long-term view is different. And it probably doesn’t hurt to pour more money into a U.S. operations hub that accounts for nearly half the vehicles sold by the automaker in America.

Alabamians already build the GLE-Class (formerly the M-Class), GLS-Class (formerly the GL-Class), and the U.S.-market C-Class sedan for Mercedes-Benz. Those three vehicle lines — four if you count the separate GLE-Class Coupe — accounted for 49 percent of Mercedes-Benz USA car/SUV sales in 2017’s first eight months.

Who’d have thunk, 22 years ago when Mercedes-Benz announced Alabama would be home to the automaker’s first major non-German plant, that we would reach a point where Americans would be responsible for assembling most of the Mercedes-Benzes Americans buy?

Through the first eight months of 2017, Automotive News reports that Mercedes-Benz has built 53,024 copies of the C-Class (down 16 percent, year-over-year) but 147,068 SUVs, an 11-percent increase.

Alabama is also home to production of the four American Honda products, production of which is down slightly to 239,534 units year-to-date, AN says. Alabama also hosts production of the Hyundai Elantra, Sonata, and the Santa Fe Sport. Hyundai’s total Alabama production is down 6 percent, all on the account of the brand’s decreasingly popular sedans.

Back at Mercedes-Benz, the German automaker will spend some of this new $1 billion investment on the company’s fifth battery plant and an after-sales-oriented logistics hub. Mercedes-Benz was already reinvesting in its Alabama operations in order to update the body shop and assembly line for current production. Naturally, the package used to entice further Mercedes-Benz investment in Alabama will include statutory incentives, performance-based incentives, tax abatements, and tax credits, according to Alabama Commerce Secretary Greg Canfield.

Mercedes-Benz first unveiled the EQ idea with the Generation EQ Concept at 2016’s Paris auto show. The production version is expected to offer around 300 miles of all-electric range.

[Images: Daimler AG]

Timothy Cain is a contributing analyst at The Truth About Cars and and the founder and former editor of Follow on Twitter @timcaincars and Instagram.


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