Daimler, the Germany-based parent of Mercedes-Benz, announced on Thursday that the company will invest $1 billion in its Tuscaloosa, Alabama, assembly plant in order to produce the company’s EQ-branded electric sport utility vehicles (SUVs). The company also said that a battery plant would be built near the existing auto plant and that, once completed, the project would yield 600 new jobs.

The Tuscaloosa plant currently builds Mercedes-Benz SUV models GLE, GLS and GLE Coupe for worldwide distribution and C-class cars for the North American market. The plant exports more than 70% of its production and is currently being expanded to accommodate manufacturing of the next generation of Mercedes SUVs, including plug-in hybrid models. In 2016, the plant produced more than 310,000 vehicles, and it currently directly employs more than 3,700 people and supports more than 7,000 jobs.

Mercedes said it plans to begin production of its EQ SUVs “at the beginning of the next decade.” By 2022 the company plans to “electrify the entire portfolio of Mercedes” and offer customers at least one electrified alternative in all its vehicle segments. The first EQ series model, the EQC, will go into production in 2019 at the Mercedes plant in Bremen, Germany.

The planned battery plant will be part of the Mercedes global battery production network to support both local and export demand. Daimler said it will invest $1.8 billion in its battery production network, including facilities in Germany and China.

Now that countries have begun to announce plans to phase out fossil fuel vehicles over the next 20 to 25 years, Daimler and every other carmaker face the challenge of moving to a new propulsion system.

The United Kingdom and France have already announced the phase-out of fossil-fueled new car sales by 2040. China has begun to develop a timetable that ultimately will end the sale of fossil-fueled vehicles. Earlier this summer, Bloomberg New Energy Finance forecast that 58% of new cars sold in the United States in 2040 will be electrified, somewhat less than the 67% forecast for European sales and somewhat more than the 51% sold in China.

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