Nissan reached an agreement to make four-cylinder engines at its Tennessee plant for Mercedes-Benz, marking a continuation of a collaboration launched in 2010 between Mercedes-Benz parent Daimler AG and the Renault-Nissan Alliance.

Nissan will start making four-cylinder powertrains for Mercedes-Benz starting in 2014 and will expand production to as many as 250,000 engines a year, Daimler said in a recent statement. The engines will be for Mercedes-Benz's North American C-Class vehicles, which will be built at Daimler's Alabama plant.

Daimler and the Renault-Nissan Alliance began collaborating in 2010 that in a move that gave Daimler a 3.1 percent stake in Renault and Nissan and gave Renault-Nissan a 3.1 percent share of Daimler. That partnership includes combining design efforts for Daimler's Smart and Renault's Twingo two-seat vehicles. In addition, Daimler will supply batteries for the Twingo battery-electric vehicles, while Renault-Nissan is building electric motors for Smart's EVs.

Mercedes-Benz is expanding its efforts to make four-cylinder vehicles in order to meet progressively more stringent U.S. fuel-economy and greenhouse-gas emissions standards. Among the 14 largest vehicle makers in the U.S., Daimler had the second-worst fleetwide fuel economy to Chrysler for the 2010 model year, according to the U.S. environmental protection agency.
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Production of engines in North America

In the latest step forward in the collaboration of Daimler and the Renault-Nissan Alliance, Nissan's Decherd, Tenn., plant will build Mercedes-Benz 4-cylinder engines for Infiniti and Mercedes-Benz starting in 2014.
Daimler and Nissan will produce Mercedes-Benz 4-cylinder gasoline engines together at Nissan's powertrain assembly plant in Decherd, Tenn. Production will begin in 2014, with installed capacity of 250,000 units per year once full ramp-up is achieved. The Decherd facility will produce engines for Mercedes-Benz and Infiniti models.
The collaboration marks the first production of Mercedes-Benz engines in the North America Free Trade region. The Tennessee plant's strategic location and logistics links ensure a direct supply of engines starting in 2014 for the Mercedes-Benz C-Class, built at Daimler's vehicle plant in Tuscaloosa, Ala.
Nissan began powertrain assembly in Decherd in 1997. Today it manufactures 4-, 6- and 8-cylinder engines for the complete lineup of U.S.-produced Nissan and Infiniti vehicles. The plant also houses crankshaft forging and cylinder block casting operations. In 2011, Decherd produced more than 580,000 engines on a covered area of more than 1.2 million square feet (111,000 square meters).
Project portfolio expands
Daimler and the Renault-Nissan Alliance launched their strategic collaboration in April 2010, including an equity exchange that gives the Renault-Nissan Alliance a 3.1 percent stake in Daimler and Daimler a combined 3.1 percent interest in Renault and Nissan.
The collaboration began with three project pillars:
•Joint smart/Twingo architecture: The project is on track for launch in the early first quarter of 2014. Two-seater smart vehicles will be produced at Daimler's plant in Hambach, France, and four-seater smart and Renault production are slated for Renault's plant in Novo Mesto, Slovenia.
•All-new entry-level city van project for Mercedes-Benz: The project is on schedule with expected launch in late 2012.
•Powertrain cross-supply: The Alliance is supplying Daimler with compact three-cylinder gasoline engines to be used in smart and Twingo vehicles and four-cylinder diesel engines to be used in the jointly developed light commercial vehicle and in Mercedes-Benz's next generation of premium compact cars. Daimler will supply Nissan and Infiniti with four- and six-cylinder gasoline and diesel engines from the current and future engine portfolio as well as with automatic transmissions.
Since its founding in April 2010, the collaboration has been gradually expanded. In addition to the announcement this week about North American engine production, the companies had decided earlier to partner on:
•Platform sharing: Infiniti plans to base a premium compact vehicle on the Mercedes compact-car architecture, starting in 2014.
•Zero-emission vehicles: Daimler will provide batteries from its production facility in Kamenz, Germany, and Renault-Nissan will provide electric motors for the use in electric vehicles (smart and Twingo ZE). First releases will occur in 2014.