European auto giants stall EV battery plant as they consider chemistry shift

Automotive giants Mercedes and Stellantis have temporary halted their ambitious European battery factory projects. The decision, announced by their joint venture Automotive Cells Company (ACC), raises questions about the future direction of EV battery technology and production in Europe.

ACC, formed in 2021 to establish a robust European battery supply chain, secured a substantial $4.7 billion investment earlier this year. The funds were earmarked for the construction of four factories, including one already operational in Douvrin, France. However, the companies have now halted work on an upcoming German facility and paused preparations for another in Italy.

ACC maintains that this is not a termination of the projects, the decision is merely a significant strategic reassessment. The company cites a need to remain "flexible" and responsive to evolving market trends as the rationale behind the pause. Notably, ACC's head, Yann Vincent, pointed to a perceived slowdown in European EV demand, a claim that seems at odds with recent sales figures showing a 14.8% year-over-year increase in April.

The pause in construction comes amid speculation that ACC is contemplating a shift toward lithium iron phosphate (LFP) cells. While offering lower energy density than the nickel manganese cobalt (NMC) cells commonly used in EVs, the LFP cells boast several key advantages. They are cheaper, more durable, and rely on more straightforward mineral sourcing.

This potential shift towards LFP technology aligns with a broader trend in the EV market. Several automakers, particularly those targeting the mass market segment, have begun incorporating LFP cells into their vehicles to reduce costs. The success of Chinese automakers, who have leveraged LFP technology to offer competitively priced EVs, has further fueled interest in this alternative battery chemistry.

Despite the delay, a move towards LFP cells could ultimately prove beneficial for ACC and the European EV market. By embracing a more cost-effective battery technology, ACC may be able to offer more affordable EVs, thereby increasing their accessibility to a wider range of consumers. On top of that, the production of LFP cells in Europe could help mitigate the risks associated with supply chain disruptions and geopolitical tensions.

Via