Thierry Breton, the European Commissioner for Internal Market, will announce the plan to produce 1 million shells per year on May 3, the AFP reported.
The plan aims to meet Ukraine's military needs and replenish the EU's reserves. It will reportedly use 500 million euros from the EU budget.
The funds will be used to finance new production lines for howitzer shells and rockets, increase the production of gunpowder and modernize old ammunition.
Funds from the EU budget will finance about 50% of projectile production projects, and member states will have to find the other half, as the total cost of the plan is expected to reach 1 billion euros.
"When it comes to defense, our industry must switch to a military economy mode," Breton said.
The EU has already pledged to spend 2 billion euros on providing Ukraine with 1 million artillery shells over the next year by using stockpiles and placing joint orders.
However, the plan has stalled due to dissensions between France and Poland over whether funds can be allocated to producers outside the European Union, including from the U.S. and the UK, according to Politico.