BERLIN -- France and Germany have asked the European Commission to approve state subsidies for a cross-border battery cell consortium involving PSA Group, its German subsidiary, Opel, and Total's Saft, a German newspaper reported on Monday.
The economy ministries of both countries sent a letter of intent to the European Union's executive body asking Brussels to quickly give its OK, the Frankfurter Allgemeine Zeitung (FAZ) said, adding that the sum of the planned support was not mentioned.
France and Germany have earmarked 1.7 billion euros ($1.90 billion) to support company alliances to help reduce European automakers' dependence on Asian suppliers and protect jobs at risk from the shift away from combustion engines.
The economy ministries of both countries sent a letter of intent to the European Union's executive body asking it to give a provisional go-ahead, a German economy ministry spokeswoman said, without giving a sum for the planned state funding.
"We are now waiting for Brussels to give us the green light," the spokeswoman said, confirming an earlier report by FAZ newspaper.
German Economy Minister Peter Altmaier will meet French counterpart Bruno Le Maire in Paris on Thursday to discuss the matter, aiming to make progress with forging further battery alliances.
The FAZ report said that the PSA/Saft alliance was planning to convert an Opel factory in Kaiserslautern, western Germany, close to the French border, into a battery cell production site.
Among the more than 30 companies that applied for state funding at the German Economy Ministry are carmakers Volkswagen and BMW, as well as German battery maker Varta and Swedish battery manufacturing startup Northvolt.
Sweden-based Northvolt is hoping to challenge the Asian dominance with a huge $1.6 million plant in its home market. The factory is scheduled to open late next year and is expected to have a 32 GWh capacity by 2023, Northvolt said.
Cells are expensive because of the raw materials needed to build them. Therefore, Northvolt hopes that by making the cathode element with help from the Sweden’s cheap renewable energy, it can build cells for less, especially when the switchover to solid state batteries happens. Northvolt even has a potential local supply from Europe’s first lithium mine in nearby Finland, which hopes to win customers attracted by its traceable and environmentally friendly extraction.
In addition, Northvolt and Volkswagen Group announced late in March they would join forces to form the European Battery Union. The consortium will focus on the entire battery value stream from raw material production, to cell technology and cell production processes to recycling.
Saft, a 100-year-old French company owned by energy company Total, produces a range of batteries for industrial applications.
It has joined forces with German industrial group Siemens, electronic components specialist Manz, Belgian chemicals group Solvay and Belgian material group Umicore to develop a new generation of batteries for electric vehicles.
The current lack of cell production is a barrier to Europe’s automakers achieving their ambitious plans to expand sales of electric cars, according to research firm Fitch Solutions. “Mass production of EVs in the EU is constrained by a lack of sufficient battery production capacity. Importing batteries from Asia remains costly,” it said in a note.
Meanwhile, Asia’s dominant battery companies are stepping up their investment in cell manufacturing operations in Europe.
Less than 1 percent of global lithium ion cell production comes from Europe, but new factories or recently opened plants from heavyweights such as South Korea’s LG Chem, Samsung SDI and SK Innovation, and China’s Contemporary Amperex Technology Ltd. (CATL) will help boost that figure to between 10 percent and 15 percent of global production by 2025, estimates France-based technology consultancy firm Avicenne Energy.
China is currently the dominant production center for lithium ion cells at 60 percent of the global total, with Japan second at 17 percent and Korea third at 15 percent, Avicenne estimates.