Mercedes Takes on Tesla With Plans to Build Electric SUVs in the U.S.

September 21, 2017, 6:25 PM UTC

Daimler AG doesn’t just plan to sell electric vehicles to U.S. consumers, the German automaker that owns the Mercedes-Benz brand wants American workers to build them too.

Daimler said Thursday it will spend $1 billion to produce electric SUVs at its Alabama factory—and build a separate battery plant—in a move that could give homegrown electric vehicle favorite Tesla a little competition.

The Mercedes electric SUV will be under a new brand called EQ, which will cover a number of electric products, from vehicles and charging services to home energy storage units. Mercedes gave the world a first look at what EQ vehicles might look like at the Paris Motor Show in 2016 when it unveiled an electric crossover concept vehicle. Mercedes also has a performance brand called Mercedes-AMG and super-luxe brand called Mercedes-Maybach.

The first EQ series model, EQC, will go into production in 2019 in Bremen, Germany.

Mercedes will begin producing its EQ-brand electric SUV at the Alabama factory in the early 2020s. That’s at least four more years. By then, it’s possible Tesla will have more than just its Model S sedan, Model X SUV, and new Model 3 mass-market passenger car. Tesla CEO Elon Musk has said the company’s next car will be Model Y, a compact crossover SUV that will be critical to meeting the company’s goal of delivering 1 million vehicles a year by 2020.

In other words, the EQ isn’t going to go head-to-head with the Tesla Model X. But it might be competing with Model Y as well as several other automakers including Audi and Volvo that plan to bring electric vehicles to the U.S. market in the next several years.

Daimler also plans to build a one million square-foot battery plant next to its Tuscaloosa, Ala.-based factory. This will be Daimler’s fifth battery plant globally. Construction for the new facility in Tuscaloosa is expected to begin in 2018, with operations planned to start at the beginning of 2020.

The investment in the Alabama factory, which currently assembles Mercedes SUV models GLE, GLS and GLE Coupé, is expected to create more than 600 new jobs in the region, Daimler said. In 2016, the plant produced more than 310,000 vehicles.

Daimler plans to electrify—a broad term that can include hybrids, plug-in hybrids, and all-electric vehicles—the entire portfolio of Mercedes by 2022. And it’s been investing in its existing factories as it works towards that goal. For instance, Daimler announced in 2015 a $1.3-billion investment to expand the Tuscaloosa factory to prepare for production of the next SUV generation including plug-in hybrid models.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.