Daimler is to invest EUR500m (US$543m) in the construction of a new battery factory, with significant expansion of production capacities for lithium-ion batteries of Deutsche Accumotive in the Saxon city of Kamenz.

The new factory will produce batteries for Mercedes-Benz and Smart electric and hybrid brands. As a first step, the full Daimler subsidiary has purchased around 20 hectares of land adjacent to the existing battery factory.

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“To get closer to fully electric driving, we keep investing big in the key component of emission-free vehicles: powerful batteries,” said Daimler chairman and Mercedes-Benz head, Dieter Zetsche.

“We are now devoting another EUR500m to build a second battery factory in Germany. This underlines our commitment to the consistent expansion of electromobility.”

By the end of 2014, the Daimler subsidiary had already announced its plans for a significant increase in its production capacities and an investment of around EUR100m in the expansion of the existing battery factory.

“With the purchase of the new land, our production area at the site will be tripled,” added Mercedes-Benz e-drive head of development Electrics/Electronics, Harald Kröger.

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“The previous 20,000 square meters will be stocked up by an additional 40,000 square meters of production space. We will expand the production capacity consistently in the coming years.”

The groundbreaking ceremony for the new factory is planned for autumn this year, with the topping-out ceremony in spring, 2017.

The new production plant is to start operations in summer 2017.

Daimler entered the business with stationary battery storage with Deutsche Accumotive last year.