FRANKFURT—Mercedes-Benz laid the foundation stone for a sustainable battery recycling factory in Kuppenheim, southern Germany on Friday.

The pilot plant will have an annual capacity of 2500 tonnes and will contribute to the production of more than 50,000 battery modules for new electric Mercedes-Benz vehicles.

Recycled batteries will come from test vehicles and start-up batteries. Based on the pilot’s success, production volumes could be scaled up in the medium to long term.

Commissioning for the first stage of the plant—mechanical dismantling—is scheduled to begin in December this year. Subject to talks with the public sector, the pilot factory will be completed a few months later.

The Kuppenheim plant already runs a CO2-neutral operation with solar and green electricity. Its construction is being funded as part of a scientific research project by the Federal Ministry of Economics and Climate Protection.