A Stellantis building in Poissy, France, on Sept. 4.Sarah Meyssonnier/Reuters
Italy’s government will reallocate some €200-million ($223-million) in European Union funds it had previously earmarked for a project led by Stellantis STLA-N to build a battery-making plant in eastern Italy, officials said on Tuesday.
ACC, a battery joint venture in which Stellantis is the largest investor, had plans for three gigafactories in Europe – at sites in France, Germany and Italy.
In June it said it was halting works on those in Italy and Germany, as the company switches to lower cost batteries amid slowing demand for electric vehicles.
A number of European companies have invested in lithium-ion battery production, but growth in EV demand is developing more slowly than some in the industry had projected, and competition is stiff from battery producers and automakers in Asia and North America.
“We have of course to schedule the capacity increase in accordance with the cell’s (demand) ramp up,” Stellantis CEO Carlos Tavares said on Tuesday during a corporate event in Turin, Italy.
“As soon as EV sales increase in Europe, as soon as I see that I need more capacity, I will trigger the investment of the two additional plants in Germany and Italy,” he said.
ACC on Tuesday confirmed uncertainty over the timing of the construction of the gigafactories in Germany and the Italian city of Termoli in a meeting at the industry ministry, the government officials said.
The venture, which also has Mercedes and TotalEnergies as shareholders, said in a statement it was ready to start construction of the gigafactory in late June, but had to deal with a “slower than expected transition to electric mobility that led to an evolution in the technology demanded by the customers.”
The news comes after Swedish-based Northvolt, Europe’s most developed battery player, last week announced plans to shrink its business and cut costs.
Italian Industry Minister Adolfo Urso said he would use the EU funds to support separate investments consistent with Rome’s energy strategy to make its economy greener.
Italy set aside €200-million from the EU’s post-COVID recovery funds for the gigafactory and pledged to earmark additional €200-million in national and regional funds.
The minister added that separate domestic state money could be earmarked should ACC be able to present a new industrial plan for Termoli at a later stage.
The availability of national public subsidies “is critical to support the competitiveness of ACC’s investment in Italy,” the joint venture said.
During the discussions, Stellantis assured the government that it would continue to produce endothermic engines in Termoli, keeping the current employment levels, in view of the transition towards the gigafactory.