Daimler has opened a batter producing facility in Beijing – its first battery plant outside of Germany – in collaboration with joint venture partner BAIC.

Lithium-ion batteries produced there will go in electrified vehicles built through their Beijing Benz Automotive Co. joint venture company.

The move follows a May 1 signing of their partnership where the German automaker will be investing in the Chinese EV subsidiary. Both companies will also be upgrading a current plant to jointly manufacture plug-in electrified vehicles. During that signing event in Berlin, German Chancellor Angela Merkel and Chinese Premier Li Keqiang watched company executives strengthen their international strategic collaboration.

Similar to its German counterparts, Daimler sees China as a critical market for its electric offensive. The company sees the new battery factory, and the BAIC alliance, as part of creating the right conditions for local production of EVs.

“Building another premium eBattery factory is the next step in the implementation of our electric strategy. Thus, we have the first foreign location in our global battery production network. The local production of batteries is crucial in order to meet the demand for electric vehicles flexibly and efficiently,” says Markus Schäfer, member of the divisional board of Mercedes-Benz cars, production and supply chain.

The two companies will jointly invest about five billion RMB (about 655 million euros and about $743 million) at the Beijing plant. Production at the battery plant is scheduled to start in 2020.

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In May, Daimler began construction of its second lithium-ion battery plant, which the German automaker said will be one of the largest in the world. That facility in Kamenz, Germany, has been in place since 2010. The second battery plant will be costing the company about 500 million euros (about $567 million).

Daimler’s corporate strategy in China was reiterated by Hubertus Troska, member of Daimler AG’s board of management responsible for the China market.

“We are investing in the world’s largest market for Battery Electric Vehicles,” Troska said. “By 2025, the Chinese market will have a substantial share in sales of Mercedes-Benz electric vehicles. Therefore, local production will be key to the success of our EV portfolio, and crucial to flexibly serving local demand for electric vehicles.”