BMW AG (BMW.XE) said Friday it will invest around EUR530 million and create more than 1,000 jobs, together with its joint-venture partner SGL Carbon SE (SGL.XE), as part of its project to launch a new Megacity Vehicle in 2013 and start producing carbon fiber components, with the German automaker's Leipzig plant accounting for around EUR400 million.

"The production of the Megacity Vehicle in Germany is a clear commitment to the high-tech location of Germany," BMW Chief Executive Norbert Reithofer said in a statement at the company's plant in Leipzig. Around 800 new jobs will be created at the plant, the company said.

The zero-emission vehicle, an electric car tailored for the use in large cities, will be launched in 2013 under a sub-brand of BMW.

BMW's megacity vehicle is the outcome of Project i, a task force established in 2007 to explore future mobility concepts and one of the Munich-based firm's best kept secrets. It is a cornerstone of BMW's plan to expand in the field of alternative drivetrains and green technology, making cars more environmentally friendly to comply with tightening emission regulations worldwide.

In August last year, BMW named SB LiMotive, a joint venture between Samsung SDI (006400.SE) and Robert Bosch GmbH, as the battery supplier for the new vehicle. The battery is a key component for electric vehicles as it determines the range and performance of the car.

The Leipzig plant started operations in 2005 and produces the compact 1-series and the small sports-utility-vehicle X1. The production network for the vehicle's light-weight carbon fiber chassis also includes BMW's German facilities in Landshut and Wackersdorf, where the carbon parts will be produced and prepared for the vehicle's final assembly.

BMW forged the joint venture with SGL Carbon to develop its expertise in the use of carbon fiber for light-weight chassis and other car components. The two companies are currently building a carbon plant in the U.S. with an initial investment of around $100 million.

On Wednesday, BMW reported a jump in third-quarter net profit to EUR871 million from EUR76 million last year and raised the profit-margin target for its auto business to more than 7% from more than 5% amid booming demand.

BMW's earnings mirror leaping profits reported last week by Daimler AG's (DAI.XE) Mercedes-Benz unit and Volkswagen AG's (VOW.XE) Audi brand. Demand for luxury cars nosedived last year during the economic downturn, but the industry staged a faster-than-expected comeback in recent quarters, fueled by a growing number of affluent Chinese car buyers and a recovery in the U.S. market.

-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com