German Chancellor Angela Merkel has broken ground on a new £431 million (€500m) factory in Germany that is planned to assemble lithium-ion battery packs for Mercedes-Benz’s upcoming line-up of EQ-branded electric cars as well as its Smart Electric Drive models, new electric commercial vehicles and future hybrid models.

The german manufacturer hopes to challenge the american Tesla and its gigafactory. Mercedes has big plans for the EV sector and announces by 2022, a minimum of 10 fully electric passenger cars.

Additionally, the rise of hybrid will continue under the EQ brand. While Tesla is partnering with Panasonic to produce its batteries, the german manufacturer has associated itself with Samsung SDI and LG.

The new factory is located 37 miles from Dresden and is supposed to start producing around mid-2018. The site will cover 20 hectares

According to the brand EVs should represent 20 to 25% of its sales by 2025