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December 09, 2019 08:41 AM

EU approves aid for battery cell production at Opel plant

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    FRANKFURT -- Opel and French battery manufacturer Saft can move forward with a plan to build electric vehicle battery cells in Germany after the European Union approved the use of state aid for the project.

    The companies plan to produce battery cells at Opel's components plant in Kaiserslautern in western Germany near the French border.

    The European Commission said on Monday that state aid could be given for the project. It said battery production in Europe is of strategic interest.

    Opel said the decision will allow the PSA/Opel/Saft joint venture, which is called Automotive Cell Company (ACC), to finish drafting a business plan for the project, but declined to provide further details.

    "The project partners will now prepare to complete an examination of the project before a final decision is taken," Opel said in a statement.

    A positive assessment could be made in weeks and a decision could potentially even be taken before the end of the year, a source familiar with the matter said. Production could start in in the middle of the next decade.

    Carlos Tavares, CEO of Opel parent PSA Group, had said in September that the project was dependent on receiving support from France and Germany, because otherwise its would be deeply loss-making.

    European automakers are investing heavily in electric cars to meet the EU's tougher CO2 reduction goals. Tavares said the bloc needs its own battery suppliers for these vehicles. "If you set a very demanding [CO2 reduction] objective for 2030 and at the same time you don’t have the batteries, we are all going to run to the Chinese suppliers and they will set the price," he said.

    Tavares declined to provide details of the Kaiserslautern plan, but said it was a significant investment "in the several hundreds of millions of euros."

    In total, the European Commission gave the go ahead for governments in seven countries to grant 3.2 billion euros ($3.53 billion) to support projects for research and innovation in battery technology. The countries are Germany, France, Italy, Belgium, Finland, Poland and Sweden.

    The public funding is expected to unlock an additional 5 billion euros in private investments, the Commission said in a news release on Monday.

    The state-aided projects will involve 17 direct participants, the release said.

    Germany sought approval to grant up to 1.25 billion euros; France up to 960 million; Italy up to approximately 570 million; Poland up to 240 million; Belgium 80 million; Finland up to 30 million; and Sweden up to 50 million, the Commission said.

    Besides PSA/Opel/Saft's ACC joint venture, companies involved in projects include BMW, BASF and Varta in Germany and the Swedish Electric Transport Laboratory (SEEL).

    The German government said it plans to finance projects proposed by BMW in addition to Opel, as well as plans by chemicals giant BASF and battery manufacturer Varta. Belgium’s Umicore is also involved.

    BASF said it planned to manufacture intermediate products and active materials for battery cell cathodes to equip 300,000 electric materials. It has already begun scouting a site in Harjavalta, Finland. It said a final decision had not been taken.  

    BMW said it would tap the funds to help it research chemical composition, cell mechanics, cell design and production processes to aid third-party cell manufacturers.

    German Industries Minister Peter Altmeier said in a statement that his department was funding the various projects with aid amounting to over 1 billion euros.

    "We want to build the most innovative and sustainable batteries and in so doing secure production and jobs in Europe. Our approach is therefor a holistic one, from materials to manufacturing and recycling," he said in a statement.

    The Kaiserslautern plant would be the second EV battery cell factory in Germany owned and operated by an automaker after Volkswagen Group’s 16 gigawatt hour site in Salzgitter. VW is investing 900 million euros in the factory with its partner Northvolt of Sweden. Production is due to start by 2024.

    VW will not apply for state subsidies for battery cell production, its procurement director, Stefan Sommer, told the business magazine Capital.

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