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June 28, 2021 04:24 AM

Renault signs EV battery deals with Envision, Verkor for French plants

China's Envision plans gigafactory in northern France with 2,500 jobs; Renault to take stake in French start-up Verkor

Staff and wire reports
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    Renault 5 EV prototype

    Envision AESC is expected to supply batteries for the Renault 5 EV small car (shown as a prototype), which will be built at the automaker's factory in Douai.

    PARIS – Renault Group has signed partnership agreements with Envision AESC of China and Verkor of France to supply electric vehicle batteries for its EV production hub in northern France. 

    Renault made the announcement on Monday, which confirmed earlier news reports, ahead of a visit by President Emmanuel Macron to Douai, France, where Envision plans to invest up to 2 billion euros ($2.4 billion) in a factory that would create 2,500 new jobs by 2030.

    The Envision AESC factory in Douai will have an initial capacity of 9 gigawatt hours in 2024, with the aim of reaching 24 gWh by 2030. It will provide batteries for the coming Renault 5 small EV and other models that are key to CEO Luca de Meo's turnaround plan for the money-losing automaker. 

    Renault said it signed a memorandum of understanding with the French start-up Verkor to co-develop and then manufacture high-performance batteries, with a view to owning a more than 20 percent stake in Verkor.

    "The combination of these two partnerships with Renault ElectriCity will create nearly 4,500 direct jobs in France by 2030, while developing a robust battery manufacturing ecosystem in the heart of Europe," Renault said in a statement.

    Renault's electric vehicle production hub, with sites at Douai, Maubeuge and Ruitz, is expected to produce 400,000 cars a year and create 700 additional jobs in the region. With the French state as its most powerful shareholder, Renault has come under pressure to preserve jobs and keep EV technology in the country.

    The automaker currently buys batteries for its Zoe model from an LG Energy Solution factory in Poland, an arrangement that will carry over to the coming Megane EV lineup planned for next year, according to the statement.

    Renault is the latest European automaker to map out a battery plan in recent months, a sign that competition to ensure adequate supply for their electric vehicles is heating up. Porsche and Volvo Cars last week announced plans to produce power packs, while Peugeot maker Stellantis will update investors on its EV strategy July 8. Volkswagen Group in March unveiled a multibillion-euro plan for six European battery factories.

    Renault is also still talking to Stellantis' battery joint venture with energy giant Total, called Automotive Cell Company, about a potential third battery tie-up for around 2027, according to its statement. 

    De Meo will give more details about Renault's battery strategy at a media event on Wednesday.

    Ambitions beyond Renault

    Envision's plans for the Douai site could go beyond Renault. Its building permit application is for a capacity of 43 gWh by the end of the decade, a goal that CEO Lei Zhang said could be achieved if deals are reached with other automakers.

    Envision is coming to France for Renault but is in talks with other major automakers on supplying batteries from the Douai installation, he said in an interview with Bloomberg.

    "We have high expectations for growth in batteries," Zhang said, putting the group's total annual sales at as much as $8 billion last year. "France is strategic for Envision."

    Renault's decision to buy batteries from Envision AESC can be traced to its alliance with Nissan, which sold a controlling stake in its AESC battery operations to Envision in 2018 but retained a 20 percent share. Zhang said an expansion of operations in the UK is possible.

    Renault's deal with Verkor could see the automaker phasing out its current battery supply agreement with South Korea's LG Energy Solution around mid-decade. No financial terms were given for Renault's stake in the startup.

    Welcome investment

    Verkor is planning to start work on a battery factory in France in 2023 with an output of 16 gWh, with 10 gWh going to Renault, it said in a separate statement. Production could reach 50 gWh in 2030 with 20 gWh going to the automaker. Renault said the power packs would be destined for larger and pricier models in its range, including the Alpine brand.

    Both Envision and Verkor executives said the availability of low-carbon power in France was a selling point for setting up battery plants.

    "France has big sources of carbon-free electricity though nuclear, hydro and renewables," Verkor co-founder Olivier Dufour said in phone interview.

    In taking a stake in Verkor, Renault will join shareholders EIT InnoEnergy, Groupe IDEC, Schneider Electric and Capgemini. Verkor and Renault declined to provide details on funding for the French battery plant.

    The Envision and Verkor projects would represent welcome foreign investment into France's beleaguered industrial sector and come amid a European Union push to increase the region's battery output, a business that has long been dominated by China's Contemporary Amperex Technology Ltd., or CATL, and LG Energy Solution.

    French government aid to Envision and Renault for the EV projects could amount to around 200 million euros, a French official said.

    Bloomberg and Reuters contributed to this report

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