Opel gets $518 million in German government funds for gigafactory

BERLIN -- Opel will receive a 437 million euro ($518 million) government grant for its battery cell factory in Kaiserslautern, Germany's economy ministry said on Thursday, as part of a wider European initiative to create a homegrown battery industry.

The market for batteries destined for electric vehicles is dominated by Asian manufacturers, but the European Union, and Germany in particular, are eager to create European battery giants as the transition to cleaner transport gathers pace.

Opel/Vauxhall recently announced that it would become an all-electric brand by 2028. The Stellantis brand this week said it would launch a full-electric version of the Astra compact in 2023, giving it three full-electric passenger vehicles as well as a range of passenger and commercial vans.  

Since 2019, Berlin has committed to invest a total of 3 billion euros in battery cell production projects, which is expected to lead to 13 billion euros of private investment and 10,000 jobs.

For Opel's Kaiserslautern plant, 51 million euros will come from regional funds from the state of Rheinland-Pfalz, according to the ministry statement, with the rest from federal coffers.

The funds come on top of 2 billion euros invested in the project by Automotive Cells Company, a joint venture of Opel, parent company Stellantis and the Saft division of French energy giant Total.

The 24 gigawatt/hour (GWh) capacity factory, plans for which were first announced in January 2020, is expected to produce battery cells for about half a million EVs per year, with production scheduled to start in 2025. 

Automotive Cells Company, or ACC, is also building a battery factory in Douvrin, northern France, that will provide batteries for vehicles built in Stellantis factories in the area. It is expected to come on line by 2023, with similar capacity to the Kaiserslautern plant.

In addition, Stellantis, which was formed this year after the merger of PSA Group and Fiat Chrysler Automobiles, has committed to build a battery plant in Italy. The automaker has also recently signed an agreement with the Chinese battery maker SVolt.

The agreement with Svolt gives Stellantis five current and future sources of batteries: Longtime partner CATL of China; ACC; China's BYD; South Korea's LG Energy; and now SVolt.

CEO Carlos Tavares said  in July that the group, which has 14 automotive brands, will need 130 gigawatt-hours of battery supply by 2025, with 80 KWh coming from Europe. That figure will reach 260 GWh by 2030, with 170 GWh in Europe -- when at least 70 percent of the group’s European lineup will be either full-electric or plug-in hybrid vehicles.

The majority of those gigawatt-hours needed for Europe will come from ACC factories.