BMW has begun production of a battery-assembly facility at its San Luis Potosí, Mexico, plant in anticipation of production of its next-generation Neue Klasse EVs.

In addition to the battery facility, BMW said in a press release that it is also expanding the body shop and making other upgrades to the site, with a total investment of 800 million euros (about $860 million at current exchange rates). The automaker also aims to generate 20% of the plant’s power from solar panels, and increase use of treated wastewater.

BMW announced that it would build Neue Klasse EVs in Mexico, as well as two European production sites, in February 2023. The battery side will supply cylindrical cells with 20% greater energy density than current cells, helping to boost charging speed and range by 30%, BMW claims. The automaker believes this tech could put it ahead of Tesla.

The groundbreaking for the expanded Mexican site was delayed, according to The Yucatan Times. BMW is however sticking to its original timeline for the end products, with Neue Klasse (German for “new class”) models set to begin rolling off Mexican assembly lines in 2027. That will be preceded by European production.

BMW cylindrical battery cells

The first Neue Klasse model, and SUV previewed by Vision Neue Klasse X concept, is scheduled to start production in Hungary in 2025. A sedan based on the minimalist Vision Neue Klasse concept will follow the SUV into production in Germany in 2026. The SUV will also be the first electric model assembled at the Mexico factory, which opened in 2019 and currently builds combustion BMW 3-Series and 2-Series models.

Named after an iconic family of BMW models from the 1960s, the Neue Klasse will be affordable and distinct, but without the polarizing design and packaging of the previous BMW i3, development boss Frank Weber said in a 2023 interview.