Mercedes-Benz will invest €500 million ($786 million) upgrading its Smart factory to produce a new "compact EQ model".
Although the company hasn't officially announced it, it's likely this car will be the production version of the EQA Concept.
Unveiled in September 2017, the EQA Concept has 200kW of combined power on tap from two electric motors — one for each axle. Range is said to about 400 kilometres.
It's not known when production of the new electric car will begin, but when it does, it will be the first Mercedes-Benz model produced in France.
Smart's factory, known as Smartville, is located in Hambach, France, about 7km from the German border.
As part of the upgrade, the Smartville factory will gain a new body shop and surface treatment centre, as well as an enlarged assembly area, and rejigged infrastructure.
In the US Smart only offers electric vehicles, and the European range will become all electric from 2020.
Mercedes-Benz is planning to launch 10 pure electric cars by 2022. It is hoping its investment of at least €10 billion ($15.7 billion) in electrified vehicles will see EVs account for between 15 to 25 per cent of all sales by 2025.