BERLIN German carmaker Mercedes-Benz has applied for tax breaks for potential projects at two of its U.S. plants under the Inflation Reduction Act (IRA), a company spokesperson said on Monday.

"We have decided to participate in the application process for production-related tax relief" under the IRA for the plants in Alabama and South Carolina, according to the spokesperson.

German daily Handelsblatt, citing several sources, reported that Mercedes is looking to expand its Alabama plant to produce the all-electric GLC from 2026 and wants to build fully electric delivery vans and medium-sized luxury transporters on the new VAN.EA electric platform at its plant in South Carolina.

A final decision is expected later this year or early next year, Handelsblatt reported. Mercedes did not want to comment on the production plan for the electric GLS.

The IRA is the US government's key incentive and investment programme to transition the economy to climate-friendly production, including by encouraging carmakers to manufacture electric vehicles in the United States.

(Reporting by Ilona Wissenbach, Writing by Miranda Murray, Editing by Friederike Heine)