BRUSSELS -- The European Investment Bank has approved 52.5 million euros ($64 million) in financing, alongside the Swedish government, for a Swedish plan to build Europe's biggest battery cell plant as part of a European Union push to compete with Asian and U.S. manufacturers.
The pilot facility by Swedish company Northvolt, whose CEO Peter Carlsson used to work for Tesla, is the most advanced European initiative to break dependence on imports.
EIB Vice President Andrew McDowell said the bank would partner with Brussels to help to develop Europe's battery capacity. Last week, the EIB's board approved financing for the Swedish plant, McDowell said in Brussels, saying the details of the deal were still being finalized.
"The EIB's board of directors last Tuesday approved 52.5 million in financing alongside the Swedish government for the Northvolt battery production project," he said.
The high costs of batteries means electric cars are still only a niche product, but regulatory action to reduce emissions combined with incentives to make EVs more affordable has spurred significant investment.
Europe's battery cell demand is projected to reach 200 gigawatt hours by 2025 - a market worth an estimated 250 billion euros annually, European Commission Vice President Maros Sefcovic said on Monday.
He and others welcomed the Northvolt initiative at the second meeting of an EU initiative to promote cooperation in a race to develop domestic capacity - dubbed the "European Battery Alliance."
"As central as the combustion engine for e-mobility are cells and batteries; we would be blind, even naive if we would think we can handle the cell and battery technology as a commodity," the deputy economy minister of automotive powerhouse Germany, Matthias Machnig, said.
"It is urgent, we have to take decisions," he said.
Battery packs currently amount to between 30 percent and 50 percent of the cost of an EV, but battery costs are falling amid increasing competition in the sector.
The market is dominated by Japanese firms Panasonic and NEC, Korea's LG and Samsung and China's BYD and CATL, as well as Tesla.