Stellantis and Mercedes-Benz Building 3 Gigafactories To Compete With China

Stellantis and Mercedes-Benz secured approximately €4.4 billion (RM22 billion) to build three new electric vehicle (EV) gigafactories in the European Union (EU). Both automakers confirmed this through a joint press release issued this week, and the total investment for these facilities is expected to be around €7 billion (RM36 billion).

These factories, which will be located in Kaiserslautern, Germany; Termoli, Italy, and an undisclosed location in France, will provide employment for approximately 6,000 people.

The project has received funding from banks including BNP Paribas, ING, Deutsche Bank, and Intesa Sanpaolo. Furthermore, the German and French governments have also contributed around €1.3 billion (RM6.7 billion), while the Italian government's contribution is still pending.

This initiative comes at a critical time for the European automotive industry, which is growing increasingly concerned about Chinese dominance, particularly in the electric vehicle (EV) market. China produced more than half of all global EVs in 2022 and it saw BYD, a Chinese EV manufacturer, outsold Tesla in Q4 2023.

With China expected to establish approximately 160 more gigafactories by the end of the decade compared to Europe's estimated 36, there are growing concerns about Chinese dominance in the EV battery supply chain.

Furthermore this is not taking into account the recent Chinese government-backed alliance amongst the battery manufacturers in China consisting of all the major players BYD, CATL and more. They aim to push towards a shared resource approach in developing the next stage in EV battery advancement - solid state battery technology.

To address these challenges, the Automotive Cells Company (ACC) was founded to support Europe's efforts to manufacture EV batteries domestically. This move aims to significantly reduce EV costs, as batteries account for a significant portion of it, while also ensuring a steady supply.

ACC's establishment is part of a larger trend of gigafactory development in Europe, where companies such as Sweden's Northvolt and the Tata Group announced plans to expand their automotive manufacturing prowess in the region through strategic alliances.

Echoing this sentiment, CariCarz.com previously reported that Tesla's CEO, Elon Musk, was concerned about the competitive threat posed by Chinese EV automakers. He now advocates for proper trade barriers against Chinese car companies, arguably without which could otherwise outperform and surpass other global automakers.

Source: EuroNews