Mercedes-Benz broke ground Friday on a new battery factory in the U.S.—right next door to its SUV factory in Alabama.

The move is an indication that the company plans to build its upcoming all-electric EQC electric SUV in Alabama. The EQC is expected to go on sale in the U.S. as a 2021 model.

Mercedes exports many of the SUVs it produces in Alabama, and in a statement the company indicated it is prepared for that to continue with electric models.

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Daimler, Mercedes-Benz's parent company, last year announced a $1 billion investment in Alabama to build the battery factory and electric SUVs in the state.

Mercedes is launching a push to develop a whole new lineup of electric cars under its new EQ brand. Of those, the EQC, a small SUV, is expected to be the first—if you don't count the suite of EQ Power–branded plug-in hybrids that's already arriving.

2020 Mercedes-Benz EQC

2020 Mercedes-Benz EQC

The company has announced that the EQC will share the fundamental layout of its other SUV designs. The battery will be mounted under the floor, but the power electronics and motor will sit under the hood.

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The company's new EQ lineup will consist of at least one hybrid or electric vehicle in every market segment the company sells cars.

The EQC is designed to compete with the Tesla Model X. When the EQC introduced in Sweden last month, Mercedes said it would have 200 miles of range from its 80-kilowatt-hour battery, but the company later said that versions sold in the U.S. would have more range.

Update: This story has been updated to include the date of the groundbreaking: Friday, Oct. 5.