This story has been updated to include new information about the partnership with battery module producer Envision AESC.
Mercedes-Benz officially opened up its first U.S. battery plant Tuesday, a key move as it ramps up its shift from gas and diesel to battery-electric vehicles.
The new facility is part of the sprawling manufacturing complex the automaker has set up just outside Birmingham, Alabama. Initially, it will provide batteries modules for use in the EQS SUV, the first BEV the automaker will build in the U.S.
“The opening of our new battery plant in Alabama is a major milestone on our way to going all-electric,” said Mercedes’ Chairman Ola Källenius.
The new plant will supply packs, only for vehicles built in nearby Vance, Alabama. This plant will have capacity in the “low hundreds of thousands,” Källenius told TheDetroitBureau.com.
The battery cells will come through a partnership with Envision AESC, which will supply the new battery factory with “high-performance battery modules.” Envision will supply those from a new plant within the U.S., starting mid-decade.
First U.S.-made Mercedes EV
The EQS SUV will launch later this year as a 2023 model. It follows the recent introduction of the EQS sedan, a battery-powered alternative to the automaker’s familiar S-Class flagship. The new SUV will provide a counterpoint to the gas-powered Mercedes GLS model.
The EQS SUV will be the first battery-electric model produced in the Mercedes assembly plant in Vance. That Alabama factory opened in 1997 and today focuses on the utility vehicles that now dominate the automaker’s U.S. sales.
A second all-electric model will be added in Vance, an SUV version of the new EQE. It will be the battery-powered counterpart to the more mainstream Mercedes GLE utility vehicle.
The Alabama plant produced 260,000 SUVs last year. About two-thirds of those were shipped abroad, making Mercedes one of the largest exporters of American-made vehicles.
Expanding EV line-up
The automaker expects to continue that approach as it migrates from internal combustion engines to electric propulsion. All told, the German carmaker plans a broad rollout of battery-electric vehicles, from compact sedans and crossovers like the EQB, to the flagship EQS models. All told, nine EQ models will be in production worldwide by the end of 2022.
It plans to produce them in North America, Europe and China and it will also launch eight lithium-ion battery cell production plants worldwide with a combined capacity of 200 gigawatt-hours.
The facility in Alabama will use an extensive amount of automation. The “fully digitalized production process” will still require the addition of 600 new jobs.
Cutting costs
Mercedes is also following industry trends in adopting a battery chemistry that minimizes the use of cobalt. That metal is expensive and has surged in price in recent months. Like competitors, such as General Motors and Volkswagen, Mercedes is struggling to slash production costs to make BEVs more competitive.
Industry-wide, lithium batteries currently cost around $150 per kilowatt-hour. Though the German automaker has announced its internal target, the general industry goal is to get that down to around $100 per kWh in the near term and eventually cut it to $70.
That longer-term goal is to get battery-electric vehicles reach parity with gas-powered models, according to Carla Bailo, CEO of the Center for Automotive Research, and it will likely happen around mid-decade or soon after, she forecasts.
