LEIPZIG, Germany (Bloomberg) -- BMW said it will invest 530 million euros ($751 million) to set up production of its Megacity Vehicle battery-powered city car.
The investments, including a new carbon-fiber factory in the United States and a 400 million-euro expansion of its Leipzig, Germany, auto plant, will create more than 1,000 jobs, the company said.
Sales for the Megacity will be “sizable” and the model will cost less than 60,000 euros, BMW development chief Klaus Draeger said.
The company is designing the Megacity as an electric-only car, saying that a distinct architecture is necessary for battery-powered driving. Rival Daimler, by contrast, is developing vehicles that can be powered with combustion engines or electric motors on the same platform.
BMW will create 800 jobs at the eastern German site as it adds production of the Megacity Vehicle, which is designed for urban driving. The car, BMW's first battery-powered auto, will be sold under a new sub-brand when it reaches showrooms in 2013.
“With this vehicle, we are revolutionizing automobile manufacturing,” CEO Norbert Reithofer said Friday at an event at the Leipzig plant.
The factory, which assembles BMW's 1-series entry-premium car and X1 small crossover, builds as many as 730 vehicles daily.
BMW is developing the Megacity Vehicle to help meet tougher environmental regulations and expand the product lineup to boost sales to 2 million vehicles by 2020 from a forecast 1.4 million this year.
Passengers in the four-seat car will be protected by a carbon-fiber safety cell, similar to those used in Formula One racecars.
BMW is using carbon fiber, which is 50 percent lighter than steel, to reduce weight and enable a smaller, less costly battery to power the vehicle.
BMW and SGL Carbon SE, the world's biggest manufacturer of carbon and graphite products, are building a $100 million factory in Moses Lake, Washington, to make the material for the Megacity Vehicle.