Frankfurt: Volkswagen AG will invest 1.2 billion euros ($1.4 billion) to revamp a plant in eastern Germany into Europe’s largest electric-car factory, giving chase to Tesla Inc.’s move into affordable zero-emission vehicles.

“We will lead e-mobility out of the niche and make the e-car accessible for millions of people,” Thomas Ulbrich, the VW brand’s head of electric-cars, told reporters in Zwickau Thursday. Electric-vehicle output will get underway in a about a year’s time, he said, with both cars and battery cells made using renewable energy.

The Zwickau site, about an hour’s drive from the eastern German city of Leipzig currently churning out Golf hatchbacks, will manufacture as many as 1,500 cars per day as of 2021, up 11 per cent to give an annual output of up to 330,000 vehicles per year.

By 2025, Volkswagen plans to produce some 50 battery-powered models across its 12 auto brands. A smooth changeover from producing thousands of combustion-engine vehicles every day will be vital for VW to defend its global leadership among incumbent rivals, while fending off new alternatives to traditional car ownership.

The world’s biggest carmaker has little time to lose. Tesla is taking strides in resolving manufacturing problems at its US factory, and plans to start selling the mass-market Model 3 early next year in Europe. In the US, the Model 3 has become a best-seller, beating all but a handful of Toyota and Honda sedans during the third quarter.

Zwickau is set to start making six different electric models from three VW group brands including the I.D. battery-car range as of 2021:

VW on Wednesday added to its high-stakes electric-vehicle push by adding two more plants in Germany, despite fairly tepid adoption so far in Europe. The decision at the Emden and Hanover sites, which will mean fewer workers will be required to piece together simpler electric cars, included a commitment of making no layoffs until the end of 2028 to appease powerful labour unions.

The Zwickau factory has a 7,700-strong workforce that will be trained to only produce electric vehicles. In 2020, VW plans to ramp up electric-car output at two factories in China, followed by the US. Subsequently, other sites across VW’s production network of some 120 plants across the globe will follow suit.

Across the VW group, the German company expects to sell between 2 million and 3 million purely electric cars by 2025, representing about a quarter of global vehicle sales. Aside from the 50 purely battery-electric models such as the Audi E-Tron and Porsche Taycan, the carmaker plans another 30 plug-in hybrid cars.

The VW nameplate alone targets sales of about 150,000 all-electric vehicles in 2020, including 100,000 made in Zwickau. The company’s namesake brand aims to make 1 million cars by 2025, based on its dedicated electric-car platform, Ulbrich reiterated Thursday, allowing more efficient integration of batteries and other components than tweaking a model developed for combustion engines.

VW’s supervisory board is set to vote on the company’s investment plan for coming years at a meeting on Friday.