Daimler and Renault-Nissan said Sunday that production of the four-cylinder engines at Nissan's Decherd, Tennessee plant is set to begin in 2014. Engines from the factory will be used in Mercedes-Benz and Nissan Infiniti cars.
The two companies in April 2010 launched a part-sharing and small car alliance.
Renault-Nissan CEO Carlos Ghosn said the latest development is "our most significant project outside of Europe so far." He noted that "localized capacity reduces exposure to foreign exchange rates."
The plan is for engines from Decherd to be used in Mercedes C-Class sedans that will be built at Daimler's Tuscaloosa, Alabama plant.