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Daimler to spend 100 million euros to expand German battery output

Gorden Wagener, Daimler vice president of design, is shown on screen speaking about the Mercedes-Maybach S-Class. REUTERS/Lucy Nicholson

FRANKFURT (Reuters) - Daimler (DAIGn.DE) will spend about 100 million euros ($125 million) in coming years to increase production of lithium-ion batteries in eastern Germany.

The German automaker said on Monday it will expand capacity at Deutsche ACCUmotive, its battery-making division in Saxony as it expects "high and steadily-growing demand" for electric-car batteries.

The unit supplies batteries for the luxury Mercedes division's hybrid S-Class, E-Class and C-Class models, Daimler said.

Steps to increase battery output tie in with Daimler's plans announced last month to phase out production of lithium-ion battery cells at its second Saxony-based Li-Tec division by the end of 2015.

Daimler aims to employ the bulk of Li-Tec's 250 workers at Deutsche ACCUmotive.

The Stuttgart-based manufacturer in future plans to buy battery cells for its 2016 electric Smart model from LG Chem <051910.KS>.

Asian makers of battery cells such as Samsung <005930.KS>, Panasonic <6752.T> and LG Chem are producing the cells at lower costs, reaping benefits from scale effects as they're also serving non-automotive industries, analysts said.

(Reporting by Andreas Cremer; Editing by Kirsti Knolle)