BERLIN -- Daimler's Mercedes-Benz will take a 33 percent stake in battery cell manufacturer Automotive Cells Company (ACC), becoming an equal shareholder alongside the project's original founders Stellantis and TotalEnergies.
The purpose of the partnership is to develop cells and battery modules and "help ensure that Europe remains at the heart of the auto industry -- even in an electric era," Daimler CEO Ola Kaellenius said in a statement on Friday.
ACC will supply Mercedes-Benz with battery technology from the middle of the decade, Daimler said.
Daimler will invest up to a billion euros ($1.2 billion) in the battery venture starting with a mid-three-digit-million cash investment next year, the company said.
ACC, which had previously planned for 48 Gigawatt hours (GWh) of capacity at two plants, now aims to reach at least 120 GWh by 2030, it said on Friday, a goal which will require seven billion euros in equity, debt and subsidies.
Daimler will hold two of six supervisory board seats for the battery maker. The companies will work together on battery technology development, including high silicon anode and solid-state batteries.
"Our focus is on Europe," Kallenius told a press conference. "That is where ACC wants to grow, expand, and develop technologies with us."
Daimler board member Markus Schaefer declined to specify what proportion of ACC's desired capacity would be allocated to Daimler, stating only that it was "absolutely significant."
Daimler’s move comes amid a flurry of activity and deals across the industry to ensure sufficient supply of batteries as demand takes off. In Europe, EVs accounted for 17 percent of sales during the first half.
The luxury carmaker, whose previous CEO Dieter Zetsche deemed producing battery cells in-house too costly, has taken a strategic turn under Kallenius towards aiming for more control over its battery supply chain.
Daimler announced its goal in July of becoming 'all-electric' by 2030 if market conditions allow. The company plans eight gigafactories, including one in the U.S. and four in Europe with existing partners and one new unnamed partner, with a capacity of at least 200 GWh.
Though European carmakers assemble battery packs for electric cars, the manufacturing of battery cells -- the essential building blocks for batteries -- is dominated by Asian companies.
"Together with ACC, we will develop and efficiently produce battery cells and modules in Europe -- tailor-made to the specific Mercedes-Benz requirements," Kallenius said. "This new partnership allows us to secure supply, to take advantage of economies of scale."
ACC was launched in September 2020 as a joint venture between TotalEnergies and Stellantis, which owns the Peugeot, Citroen and Opel brands, as well as Fiat and Chrysler.
ACC already has ties to Germany: a 2 billion euro investment in a battery cell plant in Kaiserslautern, due to start production in 2025.
ACC's first factory, in Douvrin, northern France, is scheduled to start production in 2023.
ACC is planning on expanding its network in Europe, Daimler said.
Daimler's move follows the scaling down of its industrial partnership with the Renault-Nissan alliance. Renault and Nissan both sold their equity stakes in Daimler earlier this year to help finance their turnaround efforts.
Bloomberg contributed to this report