Mercedes-Benz and Stellantis have put a hold on the construction of two EV battery plants in Europe and are considering using LFP battery cells to reduce costs. The two automakers have been working with Automotive Cells Company (ACC), a battery supplier that is planning to open three new battery plants in Europe at a cost of 7.6 billion euros. The construction work at a site in Kaiserslautern, Germany, has been halted and preparation work at a site in Termoli, Italy, has been paused, as reported by Bloomberg.
Europe’s demand for EVs has slowed, with growth expected only in mass-market segments, prompting Mercedes and Stellantis to seek lower-cost batteries for entry-level EVs. ACC CEO Yann Vincent mentioned in an interview that this shift in demand has led to a reconsideration of their plans. One option being considered is the production of LFP battery cells in Kaiserslautern, with a final decision expected later this year or in early 2025. The cell production could start up to 2.5 years after that. ACC has stated that discussions about the Termoli factory have been reopened.
Other automakers in Europe, such as Volkswagen and Renault, are also reassessing their plans for new battery factories. Volkswagen mentioned that their European battery factories may take longer to reach full capacity, while both VW and Renault have moved away from selling shares in EV or battery businesses. Sales of battery electric models have surpassed diesel sales in 2022, reflecting a significant shift in the European automotive market. Upcoming models like the Renault 5 E-Tech are generating excitement in Europe.
While the affordability of EVs in Europe is improving, there is still a lack of affordable options compared to the U.S. Ford is aiming to bridge this affordability gap by producing EVs powered by LFP batteries in the U.S. The 2024 Chevy Equinox EV, with a base version priced at $35,000 with destination, has garnered significant interest as an affordable EV option. Overall, the shift towards EVs in Europe is evident, with automakers adapting to meet changing consumer demands and cost considerations.