KAMENZ, Germany (Reuters) - Germany and its auto industry must invest heavily to ensure it is not left behind by the shift to electric cars, Chancellor Angela Merkel said on Monday as she laid a foundation stone for a new battery factory for Daimler unit Accumotive.

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“We need long-term horizons and companies that invest in the future,” Merkel said at the site in the eastern German town of Kamenz. “It is important that electric mobility is ready for the market as quickly as possible.”

While Germany’s automakers are ramping up production of electric cars, most batteries they use are made in Asia, prompting fears that Germany could lose its leadership in the core car technology of the future.

Merkel came under fire this month when she admitted Germany was likely to miss the government’s target of bringing 1 million electric cars onto the roads by the end of the decade.

Merkel said new technologies sometimes take time to get off the ground and end up being exploited by those other than their original inventors, citing the example of German engineer Konrad Zuse, who developed the first programmable computer in 1941.

“This should be a lesson for technology policy. We don’t want to experience that again,” she said.

In March, Mercedes-Benz owner Daimler said it was speeding up its electric car program, aiming to bring more than 10 new models to market by 2022 through 10 billion euros ($11 billion) of investment.

In Kamenz, Daimler is investing around 500 million euros in its second factory there for lithium batteries, that should be operational by the middle of 2018, quadrupling production.

“The auto industry faces a fundamental transformation. Technical change cannot be stopped, with or without the German car industry and I think it would be better with us,” Daimler Chief Executive Deiter Zetsche said.

The Kamenz factory still relies on imported battery cells and Merkel said Germany should do more in that area.

During her weekly podcast on Saturday, she said the German government has invested 35 million euros in battery research and was keen to build clusters of expertise.

“If we are involved in research and in prototypes, there is a better chance of bringing the production of the next generation of cells to Europe or to Germany,” she said.

Merkel said she had been briefed about the latest lithium cells which could allow cars to travel up to 1,000 kilometers without needing to be recharged - a major advance from current operating range of 200-300 kilometers.