As electric vehicle program boosting up, the auto industry giant Mercedes-Benz will spend $1 billion to upgrade company’s production capabilities in Alabama.

The Daimler (DDAIF) owned company said in a statement that the new investment will create 600 new jobs in communities near its plant in Tuscaloosa.

The automaker plans to make new electric SUV models at the existing factory, and construct a battery plant nearby.

The mega investment in US will put the German firm in direct competition with Tesla (TSLA) on its home turf.

"With production locations for electric vehicles and batteries in Europe, China and, now, the U.S., our global network is ready for the era of electric vehicles," CNN quoted Markus Schäfer, the automaker's head of production planning.

Mercedes says it is responding to increased demand for hybrids and electrics. It unveiled the electric car concept, the Mercedes-EQ, at the Paris auto show last year.

It says that by 2022 it will offer customers at least one electrified alternative in all vehicle segments.