SAN JOSE CHIAPA, Mexico – A telltale sign of Audi’s ambitious North American expansion plans is the automaker’s sprawling assembly plant now in the early stages of construction here.

Set on 1,137 acres (460 ha) on the outskirts of San Jose Chiapa, some 1,200 trucks go in and out of the grounds daily as earth is moved, new foundations laid and steel planted for the German luxury-car maker’s first vehicle factory in the region.

Scheduled to launch series production in mid-2016, the new facility – with twice the physical footprint of parent Volkswagen’s 600,000-plus capacity plant in nearby Puebla – will build some 150,000 Q5 CUVs for sale in North America and export around the world.

But the plant is about more than just building vehicles. For Audi, it is the first big stake in the ground for what is foreseen as a significant presence in the region by the end of the decade.

Symbolic is the latest groundbreaking ceremony held last week for a 148-acre (60-ha) supplier park on the plant grounds that will see an initial wave of seven parts makers set up operations to provide components just-in-time and in sequence to the adjacent Q5 plant.

The park is just a first step. But it also represents a culmination of sorts for Audi in its intensive, 18-month effort to recruit and cultivate North American suppliers as it builds a local auto-making infrastructure from scratch in Mexico. Additional phases are likely as more parts makers decide to co-locate here.

Maximizing local content is critical for the operation, not only because it will lower costs and simplify logistics, but also because it is needed for San Jose Chiapa to serve as a launch pad for Q5s sold around the world.

Once completed, the plant will be the sole source for all next-generation Q5s sold globally, with the exception of China, which also will tool up for the vehicle at a new plant.

Of San Jose Chiapa’s 150,000-unit 3-shift capacity, officials expect about 40,000 of the CUVs to be shipped to the U.S. and Canada and a small portion to serve the local market, where Audi currently sells about 12,000 vehicles annually. The remaining 100,000-plus units will be exported to Brazil, Argentina and elsewhere in Latin America, as well as to Europe, Japan and other markets in the Asia-Pacific region.

Minimum local content of 65% will be needed to ship vehicles to the U.S. and Canada under the North American Free Trade Agreement, but Audi says it expects to achieve an even higher 75% at launch and ultimately reach 90% as it moves to localize powertrain production.

So far, the automaker has 130 suppliers lined up to service San Jose Chiapa, more than 75% North American-based and 20% from Europe.

“If 90% of the cars would stay in the U.S., then maybe the U.S. is a better place (for locating the new plant),” purchasing chief Bernd Martens concedes. “But if you have a big volume which also goes abroad, then you have to have (a location) with trade agreements that favors exports.

“This was the key element,” he emphasizes. “Mexico has better conditions in terms of exporting cars to the world than the U.S.”