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Daimler teams up with Stellantis to build European gigafactories

Automaker to take 33% equity stake in joint venture backed by French and German governments

Joe Miller in FrankfurtSeptember 24, 2021 6:04 am

Daimler chief executive Ola Kallenius unveils a Mercedes-Benz electric vehicle this month. Mercedes has rolled out electric versions of its flagship S-Class saloon and E-Class models © Bloomberg


Daimler is to join forces with competitor Stellantis and energy company TotalEnergies to develop and produce battery cells for electric cars in Europe.

The German luxury automaker said on Friday that it would take a 33 per cent equity stake in Automotive Cells Company, a joint venture set up by Stellantis and TotalEnergies last year, which plans to build gigafactories in France and Germany.

ACC has already secured €1.3bn in financial support from the French and German governments. Daimler said it would invest a further “mid-three-digit-million euros” next year in the project, on which it will hold two board seats, and be an equal partner with Stellantis and Total.

Additional funding from Daimler over the next few years will not exceed €1bn, the carmaker added, but it said the entire project would require more than €7bn in investment to reach “a capacity of at least 120 gigawatt hours in Europe” by the end of the decade.

“This new partnership allows us to secure supply, to take advantage of economies of scale and to provide our customers with superior battery technology,” said Daimler chief executive Ola Kallenius. The project would “ensure Europe remains at the heart of the auto industry,” he told reporters.

Mercedes-Benz, which is owned by Daimler, said this year that it would be prepared to phase out internal combustion engine models by the end of the decade, “wherever market conditions allow”.

The Stuttgart-based manufacturer has rolled out electric versions of its flagship S-Class saloon and E-Class models in recent months, and plans to offer emissions-free versions of the rest of its line-up. Smart, the brand Daimler co-owns with China’s Geely, is already fully electric.

In order to produce its electric vehicles, Mercedes-Benz would need at least 200GWh in battery capacity, the brand said in July when it announced it would build eight gigafactories worldwide: one in the US, four in Europe and three in Asia.

ACC said last year that it would build gigafactories in Douvrin, France and Kaiserslautern, Germany, close to the site occupied by Stellantis brand Opel.

Kallenius said Daimler had spoken to other European battery cell manufacturers, including Sweden’s Northvolt and Britishvolt, but that ACC was the “best fit” for the Mercedes owner.

ACC’s production capacities “will cover a large part of our demand,” he added, but did not rule out further collaborations on the continent.

Daimler already buys batteries from third parties such as China’s CATL and has a stake in Chinese battery-cell manufacturer Farasis, which aims to build a plant in Germany.

The German automaker denied media reports that early batteries made by Farasis — whose shares have lagged behind others in the sector this year — had proved to be below standard, adding that the battery maker “remains a key partner for Mercedes-Benz”.

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