Daimler to Invest $1 Billion in Alabama Plant -- 2nd Update
September 21 2017 - 02:51PM
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 here of a fully electric sport-utility vehicle.
The German auto maker's expansion in the U.S. is part of its
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 entire
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's
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 would begin production of an electric SUV early
next decade at the Tuscaloosa plant and in 2018 begin construction
nearby of a facility to assemble battery systems for use in those
and other vehicles. Combined, the new plans are expected to create
as many as 600 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 in
Europe.
The billion-dollar bet by Daimler is part of a wave of U.S.
investments planned by foreign auto makers despite weakening sales
volumes and widespread expectations for further declines in the
market.
Earlier this week, Chinese-owned Volvo Cars 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 midsize SUVs as well as entry-level C-Class
sedans. The company has reduced output of those sedans to ramp up
production of SUVs, Mr. Schäfer said. More than 70% of the SUVs
manufactured at the Alabama plant are exported to global markets
such as China.
"We see a global trend toward SUVs" and away from sedans, he
said.
Daimler said some of the new EQ SUV production will also be
exported but wouldn't specify how many of these vehicles it expects
to sell in the U.S. These fully electric vehicles will be
integrated into the gasoline engine and hybrid gas-electric
assembly lines in Tuscaloosa.
"We don't foresee any building expansion per se" at the existing
plant, said Jason Hoff, chief executive of Daimler's manufacturing
operations in Alabama.
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 planned for 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.
Alabama state officials didn't disclose the amount of tax
abatements and other incentives being offered to attract the
additional investment from Daimler. That is still being negotiated,
but will be disclosed pending a final agreement, said Alabama
Secretary of Commerce Greg Canfield.
Write to Chester Dawson at chester.dawson@wsj.com
(END) Dow Jones Newswires
September 21, 2017 14:36 ET (18:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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