Mercedes will invest billions of dollars to modernise its plants in China, Germany and Hungary over the coming years, magazine Automobilwoche reported, as the carmaker prepares to switch to electric vehicles and cut emissions.

The European Union has set a goal to halve CO2 emissions per passenger car over their life cycle by the end of this decade compared to 2020 and is seeking agreement on a 2035 deadline to end the sale of fossil fuel cars.

Mercedes has said it will be ready to go electric by the end of the this decade, where market conditions allow.

“We are investing a three-digit million amount per plant for the run up,” production manager Joerg Burzer was quoted as saying by the magazine, adding that these investments will be at the plants in Beijing, Rastatt in Germany and Kecskemet in Hungary.

The carmaker will start work on the Rastatt plant over the coming months and will produce the first model of the compact vehicle platform MMA from 2024. The number of models produced there will be cut to four from seven, Burzer said.

In addition, Mercedes will invest a low single-digit billion dollar sum in modernising the painting systems at its Sindelfingen, Bremen and Rastatt plants in Germany.

The report said the modernisation aims to cut energy and water consumption, and the painting system’s reliance on gas, as opposed to carbon-free energy. Mercedes is also considering expanding its U.S. plant in Tuscaloosa, where it can benefit from government subsidies under last year’s Inflation Reduction Act, Automobilwoche said.

Burzer said Mercedes was ready to respond to any further changes in the regulatory environment.

“The framework conditions worldwide change again and again, we may have to react to that,” Burzer said.

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