Mercedes-Benz this week announced plans to spend CNY14bn (US$2bn) on its Chinese operations to strengthen its local product range as competition in the largest automotive market continuing to escalate.

Competition in China’s battery electric vehicle (BEV) market has increased sharply in the last few years with established local automotive groups and startups stepping up new model launches and new brands while offering deep discounts.

The automaker plans to launch a range of new products based on its new Mercedes Modular Architecture platform, starting in 2025 with the launch of a new long wheelbase, battery powered CLA luxury sedan.

Other planned new models include a long wheelbase version of the GLE SUV and a battery powered luxury MPV based on the VAN.EA architecture.

The new models will use the newly developed Mercedes-Benz Operating System, which features a new virtual assistant which uses generative AI and advanced 3D graphics as well as a point to point urban intelligent driving system.

The system was designed to compete with similar technology already offered by domestic brands.

The new long wheelbase GLE SUV would be the first model developed by the local R&D operation.

Mercedes-Benz Group chairman, Ola Kaellenius, said: "The investment is a natural choice for us. Our China strategy is one of our main pillars of our overall global strategy. The dynamism of this market, the pace of innovation, the transformation into new energy vehicles makes China the next phase (priority) for us."

Mercedes-Benz and its local JV have spent CNY100bn on their operations in the last 10 years.

Earlier this year, BMW announced plans to spend an additional CNY20bn on its production operations in Shenyang to strengthen its new product development and production operations.