Berlin (AFP) - German carmaker BMW said Wednesday it will invest $1.7 billion in the production of electric vehicles in the United States.

The plan includes $1 billion towards expanding the company’s Spartanburg US manufacturing plant and $700 million for a new battery assembly facility, BMW said in a statement.

“The BMW group continues the roll-out of its electromobility plan with a new investment in the US,” the company said.

The Spartanburg plant in South Carolina is already BMW’s biggest factory, producing 1,500 BMW X vehicles a day.

The new high-voltage battery assembly facility will be located in Woodruff, South Carolina, BMW said.

The German group has also signed an agreement with Chinese battery manufacturer Envision AESC, which will “build a new battery cell factory in South Carolina” with an annual capacity of up to 30 GWh.

The group plans to produce at least six fully electric BMW X models at the Spartanburg plant by 2030.

The aim is for the factory to become “a major driver for our electrification strategy”, said Oliver Zipse, chair of BMW’s management board.

The move is part of a shift towards electrification at BMW and in the German car industry as a whole.

BMW already sells the i3 model but it has nonetheless lost market share to Tesla.

The German luxury brand is aiming to have two million electric vehicles on the road by 2025, promising 13 new electric models and a revamp of its Mini series.

However, the new investment comes amid tensions over President Joe Biden’s landmark “Inflation Reduction Act”, which includes tax breaks for US-made electric cars and batteries.

European Union officials have said the policy could put e-cars made elsewhere at an unfair disadvantage.

German Economy Minister Robert Habeck on Wednesday warned that the US plans “must not destroy the level playing field between our two economies” and called for “a strong answer from the European side”.

Speaking after talks with his French counterpart Bruno Le Maire, Habeck said companies were being “drawn away from Europe to the United States because of the strong subsidies paid”.

The US is also an attractive potential production base for German manufacturers struggling with soaring energy costs in the fallout from Russia’s invasion of Ukraine.

Gas prices remain low in the United States thanks to abundant domestic production.