Mercedes-Benz announced on Monday it has started production on a new engine plant in Poland — just the second plant for engines it will have outside of Germany.
The leader in luxury car sales said it is building a 50 hectare plant in Jawor, investing €500m in the site and creating some 500 jobs.
The focus of the plant is conventional combustion engines, underscoring that even if electric cars are expected to ramp up in the next decade, fast-growing car companies are still investing heavily to build and improve traditional engines.
The plant will also build engines for hybrid electric-gas cars.
Lower wages are a likely driver. According to the OECD, average annual wages in Poland were $12,257 in 2015, versus $41,716 in Germany.
“We are aligning our global production network towards the future and show that we are able to do both sprint and marathon,” said Markus Schäfer, a boardmember of Mercedes parent Daimler, overseeing production. “Due to high global demand, we will be producing conventional engines for hybrid vehicles and combustion engines in increasing quantities.”
The new site is to be equipped with the latest “Industry 4.0″ production technologies, from app-based methods to energy saving processes using wind, solar and biogas application for CO2-neutral engine production.