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European carmakers raise £4bn for gigafactories in race to cut reliance on China

ACC gigfactory
Automotive Cells Company, a joint venture between Mercedes-Benz, Stellantis, and TotalEnergies is to open another three factories

Europe’s largest car manufacturers have borrowed €4.4bn (£3.75bn) to build three new battery factories in the EU as the bloc seeks to cut dependence on China.

A joint venture between Mercedes-Benz and Fiat-owner Stellantis has borrowed the funds to build new electric vehicle (EV) “gigafactories” across the continent over the next few years.

Automotive Cells Company (ACC), which is also co-owned by France’s TotalEnergies, said the €4.4bn fundraise was one of Europe’s largest ever debt issues in the EV sector.

It has borrowed the funds for the project from banks including BNP Paribas, Deutsche Bank, ING and Intesa Sanpaolo.


ACC was set up in 2020 to become a “European champion” for EV car batteries amid a push by EU officials to reduce reliance on Asia.

It opened its first French factory last summer in the Billy-Berclau Douvrin region, dubbed the “valley of the batteries”. It will employ 2,000 people.

ACC’s three new factories will be in the German city of Kaiserslautern, Termoli in Italy and a second location in France. 2,000 people will be employed at each site, helping ACC’s headcount rise to around 8,000.

Around 40pc of the cost of an electric vehicle comes from the battery itself and ACC said producing more EV batteries inside Europe would lead to “significantly” cheaper cars.

ACC is aiming to raise €7bn overall to fund construction of the new factories.

The investment, which is partly supported by EU funds, comes amid fears about a lack of self-reliance within the EU car industry.

The global EV battery industry is effectively controlled by China, Korea and Japan, with China home to around 70pc of global manufacturing capacity as of 2021.

This has prompted concerns amid growing tensions between the West and China.

There are currently 240 gigafactories around the world, with an additional 160 to be built over the next six years mainly in China, according to Benchmark Mineral Intelligence. Europe will have 36 by 2030, according to the research group.

Chinese giant Contemporary Amperex Technology, known as CATL, will have two of Europe’s five largest gigafactories by the end of the decade. It is planning plants in Hungary and Germany.

Italian Prime Minister Giorgia Meloni
Giorgia Meloni's ongoing disagreement with Stellantis over production output has complicated ACC's plans - Rodrigo Reyes Marin/Pool via REUTERS/File Photo

EU members have subsidised some of the ACC scheme, with the French and German government’s putting in €1.3bn.
Italy is yet to back ACC amid a fallout between Stellantis and prime minister Giorgia Meloni.

Ms Meloni wants Stellantis to produce 1 million vehicles in Italy per year, with state subsidies seen as a bargaining chip in negotiations.

Stellantis is a Franco-Italian company created through the merger of Fiat and Peugeout. It is the majority owner of ACC with a 45pc stake. Germany’s Mercedes-Benz owns 30pc and TotalEnergies, through its subsidiary Saft, owns 25pc.

Yann Vincent, head of ACC, said: “The transition to the electrification of vehicles is still on the way.

“To meet this immense challenge, our customers must be able to rely on robust and reliable European players like ACC, capable of delivering high volumes of competitive batteries with a low CO2 footprint.”

ACC is one of a number of companies rushing to build and expand gigafactories in Europe.

Northvolt, the Swedish start-up founded by former Tesla executives, last month raised €5bn of debt from 23 banks to expand its factory. It supplies BMW and Volkswagen.

In the UK, Tata Group last year announced a £4bn investment to build a new factory in Somerset.

Tesla, which coined the term gigafactory a decade ago, opened a plant near Berlin in 2022 to build both its cars and batteries. It is currently ramping up production of batteries, though scaled back plans last year in favour of investment in the US to take advantage of significant subsidies.