Stellantis said it will build a new battery-electric car at its plant in Kragujevac, Serbia.
The EV will replace production of the Fiat 500L, Stellantis said in a statement.
Stellantis CEO Carlos Tavares and Serbia President Aleksandar Vucic signed a 190-million-euro ($200 million) deal on Thursday to invest in EV production at the factory.
The new, yet-to-be named, compact EV will go into production at the beginning of 2024, Stellantis said. Another EV might be added at a later date, the company said.
The Serbian investment will help the automaker, which was formed by the merger of Fiat Chrysler Automobiles and PSA Group, to reach its goal of selling only battery-electric passenger cars in Europe by the end of this decade, Stellantis said.
Fiat has said that its product lineup will become electric-only between 2025 and 2030.
Serbia has a 33 percent stake in the factory, which formerly built Yugo cars under the government owned Zastava Automobili business.
Vucic said that Serbia, which has not yet produced electric cars, will have to consider the opening of numerous charging stations to attract local buyers, as well as to adopt a new energy strategy.
“We have to secure cheaper electricity and to achieve that we have to have more renewable energy,” Vucic said.
Stellantis did not give further details on the vehicle that would be built, but Tavares said its platform would “fit perfectly” with vehicles in the minicar, small and compact segments.
“This new platform for electric vehicles will fit perfectly with products from A, B and C categories and will improve efficient and clean solutions for urban mobility of our brands,” Tavares said.
Reuters contributed to this report