January 10, 2019 (Reuters) - BMW (BMWG.DE) announced on Wednesday that it will invest 650 million euros ($711 million) to convert its main plant in Munich to produce only electric vehicles starting at the end of 2027. This is a significant step towards the shift to an electric vehicle.

It is constructing four buildings, including a body shop and assembly line for new cars, and has relocated 1,200 workers who were formerly employed in traditional engine manufacture to Austria and Great Britain.

BMW hasn't given itself a timeline to stop making combustion engine vehicles, but by 2035, new sales of gasoline and diesel vehicles will be prohibited by EU legislation. By 2026, it is anticipated that a third of BMW sales would be electric, up from 15% in 2023. A combination of improving supply chain conditions and economic challenges have led to slower-than-expected EV sales, according to other automakers like Mercedes-Benz and Volkswagen.

In September of last year, BMW debuted its "Neue Klasse" preview at the IAA auto show. This was the company's multibillion-euro attempt to outpace rivals like Tesla and other EV manufacturers in terms of technology.

The vehicle will be produced at the Munich facility starting in 2026 in parallel with combustion engine vehicles. It will be about the size of the automaker's currently popular 3-series model line. 

It will also be manufactured in Shenyang, China, San Luis Potosi, Mexico, and BMW's new facility, which is now under development in Debrecen, Hungary.