Capital Markets

France Unveils Battery Gigafactory, Driving Massive Investment in Electric Vehicle Industry

Published by
Matthew Martins
  • France inaugurates battery gigafactory in the north, the first of four planned plants in the region.
  • Joint venture involving Stellantis, Mercedes, and TotalEnergies attracts €2 billion ($2.20 billion) investment, with significant support from the French state and local authorities.
  • Gigafactory aims to produce lithium-ion batteries, with initial capacity of 13 GWh and plans to scale up to 40 GWh, supporting the production of approximately 500,000 electric cars annually.

France celebrated a significant milestone in its auto industry transformation as it inaugurated a battery-making gigafactory on Tuesday. The gigafactory, situated in the north of the country, marks the first of four planned plants and represents a joint venture between Automotive Cells Company (ACC), Stellantis, Mercedes, and TotalEnergies. This groundbreaking development entails a total investment of €2 billion ($2.20 billion), with nearly half of the funding provided by the French state and local authorities. The move underscores the fierce competition among European governments to entice global car manufacturers and establish a localized supply chain for electric vehicle components.

Ola Källenius, Chief Executive Officer of Mercedes-Benz, stated ahead of the inauguration, “ACC’s new plant marks a key milestone in Europe’s transformation to make its auto industry more resilient, competitive, and sustainable, also in the electric era.” Källenius’s remark underscores the pivotal role that the gigafactory will play in shaping Europe’s automotive industry in the electric vehicle era.

Set to commence lithium-ion battery production later this year, the gigafactory has an initial production capacity of 13 gigawatt hours (GWh) annually. However, the plan is to ramp up production to approximately 40 GWh, which would be sufficient to power around 500,000 electric cars each year. The project is expected to create up to 2,000 jobs by 2030, significantly contributing to the region’s employment growth.

The northern region of France, particularly around the port of Dunkirk, has emerged as a prominent hub for gigafactory development. In addition to the ACC plant, Taiwan’s ProLogium and China’s Envision AESC have announced their intentions to establish battery gigafactories in the same area. Meanwhile, Renault has entered into a partnership with local start-up Verkor in the Dunkirk region to produce batteries for its premium and Alpine electric models. These initiatives exemplify the concerted efforts of European countries to reduce their reliance on Asian battery manufacturers and strengthen their domestic battery industry.

Europe has traditionally relied on imported batteries from Asia to power its electric vehicles. In response, national leaders have implemented incentives and subsidies to bolster the domestic battery industry. The urgency to localize battery production has intensified following the passing of the United States’ $430 billion Inflation Reduction Act last year, which includes substantial tax subsidies to curtail carbon emissions and enhance domestic manufacturing.

French President Emmanuel Macron, personally invested in securing at least one gigafactory in the Dunkirk region, has set an ambitious target of manufacturing 2 million electric vehicles in France by 2030. This ambitious goal aims to position France as a global leader in the electric vehicle sector, leveraging its capabilities in battery production and technological innovation.

The inauguration of the battery gigafactory and the subsequent developments in the Dunkirk region propel France closer to achieving its ambitious targets and solidifying its position in the rapidly expanding electric vehicle market. As the global demand for electric vehicles continues to surge, these initiatives will not only revitalize France’s automotive industry but also contribute to the nation’s sustainable and competitive future.

Matthew Martins

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Published by
Matthew Martins

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