MILAN (Reuters) - Automaker Stellantis is investing 38 million euros ($41 million) in its Verrone plant in Northern Italy to manufacture parts for electric engines for its upcoming small-size models, it said on Monday.

The plant will manufacture steel components for electric drive modules Stellantis ( STLA ) currently makes in other European facilities, the company said in a statement, adding production is expected to start at the end of 2027.

Stellantis ( STLA ) has a target to produce more than 400,000 units per year at full capacity, but it said it would consider increasing annual output by further 200,000 units based on automotive market performance in Europe.

The European car market is undergoing a complicated transition as EV sales growth disappoints and carmakers oppose measures to encourage consumers to abandon combustion engines, such as CO2 emission rules.

The new production will be added to Verrone's existing output of transmissions for petrol engine cars. More than 200,000 transmissions were produced last year at the facility, which currently employs around 350 people, the company said.

Chairman John Elkann, who is steering Stellantis ( STLA ) while it searches for a new CEO after former boss Carlos Tavares left in December, will attend a parliamentary hearing in Rome on Wednesday on the group's auto manufacturing activity in Italy.

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