Stellantis plan to go to one production line from two at its assembly plant in Melfi, southern Italy, but will still have capacity to produce about 400,000 vehicles a year, according to Italian unions.
That would top the plant's peak of 393,000 units assembled in 2015.
Stellantis is set to produce four midsize segment electric vehicles for its different brands in Melfi starting in 2024, underpinning them with its forthcoming full-electric STLA medium platform, according to the FIM-CISL and UILM unions.
The automaker announced that Melfi would be the first plant in the country to get new models based on a post-2022 business plan, UILM added.
"Stellantis is working with determination and speed to anticipate and support the energy transition of all its Italian industrial sites with the aim of ensuring sustainability of its manufacturing sites," the company said in a statement.
The plans were outlined on Tuesday at a meeting with between Stellantis officials, Italy Economic Development Minister Giancarlo Giorgetti and union leaders.
Giorgetti said in a statement after the meeting that the discussion was positive but there are still things that need to be cleared up. There was, for example, no final decision on where to produce the battery cells.
According to FIOM-CGIL, the plant will add a battery assembly line.
"The creation of a battery gigafactory in Italy will be key," the union said in a release.
Discussion are ongoing about battery production in Italy, with Stellantis possibily taking a role.
STLA medium is one of four electrified platforms planned by Stellantis, which was formed in January by the merger of France's PSA Group and Fiat Chrysler Automobiles.
The automaker will underpin both compact and midsize cars with STLA medium, according to a presentation by Stellantis CEO Carlos Tavares in March.
Stellantis said the plant will run up to 19.5 eight-hour shifts a week, which union official say will make production "10 percent more efficient."
Stellentis currently makes the Fiat 500X small crossover, Jeep Renegade small SUV and Jeep Compass compact SUV in Melfi. Plug-in hybrid version of the Jeeps are also assembled at the plant, which exports the Renegade and 500X to the U.S.
Production at Melfi has declined from its 2015 peak to as little as 248,100 units in 2019 and 229,848 in 2020. Output rebounded 29 percent to 63,805 units in the first quarter, according to union figures.
The Melfi plant employed 7,200 workers at the end of March, according to unions, while Stellantis employs more than 50,000 workers across several-dozen manufacturing plants in Italy. Last year, the government led by Premier Giuseppe Conte approved a 6.3 billion-euro ($7.6 billion) credit facility for Fiat, the largest government-backed financing arranged for an automaker in Europe during the coronavirus pandemic.
As part of its green transition push, the new government led by Mario Draghi is planning to invest about 25 billion euros of European Union recovery funds in new infrastructure and top-up that amount with domestic funds for an overall investment of more than 31 billion euros.
Bloomberg contribute to this report