Toyota Motor Europe has announced plans to build a new $165 million plant in Poland that will produce transaxles for hybrid vehicles and add two engine production lines at an existing plant.

The new Toyota manufacturing facility will start production in 2018 located at Toyota Motor Manufacturing Poland (TMMP) in Walbrzych.

“We are very pleased to be able to bring hybrid transaxle and additional petrol engine production to the heart of Europe, here in Poland, where the members of our plants have developed exceptional quality and competitiveness,” said Johan van Zyl, president and chief executive officer of Toyota Motor Europe.

The investment announcement comes a week after Daimler revealed it would spend $560 million to build a new Mercedes-Benz engine plant in Jawor, Poland.

The hybrid transmission to be produced is a key component of Toyota’s hybrid powertrain, and will be fitted with the 1.8-liter ZR engine.

This hybrid powertrain will be used in the European Auris and Auris Touring Sports Hybrid vehicles sold in Europe, as well as the new C-HR crossover when it starts production at the end of this year.

SEE ALSO: Toyota 2017 C-HR Hybrid Crossover Important for Europe, Coming to US Next Spring

The hybrid transaxle for the Auris hybrids is currently produced at Toyota Motor Corp. in Japan and imported to Europe.

The projects bring Toyota’s total investment of manufacturing operations in Poland to more than $1 billion since operations began in 2002 with the production of diesel engines.

Diesel powertrains have been the preferred choice for personal transportation for decades in Europe.

But the market is changing, and a new generation of plug-in hybrids that can operate on electricity, gasoline or both is grabbing the attention of European buyers, adding to the growing numbers of the traditional hybrid vehicle.

Going forward, Toyota Motor Europe expects its hybrid sales in Europe to increase from its current level of 31 percent of total sales to a target of 50 percent by 2020.

“We are committed to further strengthen our presence in Poland,” said Eiji Takeichi, president of Toyota Motor Manufacturing Poland. “Adding the hybrid production makes our operations sustainable for the future for the benefit of our members and local community.