Stellantis and Mercedes pause construction of ACC battery factories

The market uncertainty surrounding electric car sales is impacting the Franco-German battery cell manufacturer Automotive Cells Company’s (ACC) plans. The joint venture of Stellantis, Mercedes, and TotalEnergies has decided to pause the construction of its factories in Germany and France. In addition to the EV slowdown, other reasons are cited.

ACC, the joint venture between Mercedes-Benz, Stellantis, and TotalEnergies, unveiled big plans three years ago. By centralizing their research efforts and investing 7 billion euros, they would prepare enough battery cell output for their car brands to be fully electric. It laid out the blueprint for the production of more than 200 GWh annually in eight factories all over the world. There was no time to waste.

Kaiserslautern and Termoli

Now, the group has announced a temporary halt in constructing its European factories in Kaiserslautern, Germany, and Termoli, Italy. Matthieu Hubert, ACC’s Secretary General, explained that European consumers are hesitant to adopt EVs, and there are significant infrastructure and material cost hurdles.

The decision over how to proceed with these specific projects will be taken by the end of the year or the beginning of next year at the latest. The Kaiserslautern plant was initially expected to start operations in 2025, followed by Termoli in early 2026.

If the market shows no sign of gaining momentum, could the involved parties abandon their cooperation? It seems unlikely. Battery cell production in the third European plant, in Douvrin, France, is currently ramping up, and a second assembly line is slated.

As each site creates two hundred jobs and is co-funded with taxpayer money, the implications are social and geopolitical. It would further weaken the European automotive industry in the wake of the Chinese dominance in this field.

Despite these delays, ACC secured €4.4 billion in financing earlier this year to support its development.

Switch to LFP?

Furthermore, the joint venture is investigating how to align the decision with a new opportunity. Hubert said: “Before we invest billions, we must determine what kind of battery cell technology the market needs.”

The battery conglomerate is reconsidering its technology focus. Reports suggest ACC might switch to producing LFP (lithium-iron-phosphate) batteries, which are cheaper and more durable than the NMC (nickel-manganese-cobalt) batteries currently planned.

This potential switch could be a significant setback for Belgian material handler Umicore, which specializes in NMC battery materials and is a supplier to ACC. The strategic reconsideration would impact the stakes of the Antwerp-based company in this project.

Stellantis has already announced building a factory with CATL for LFP cells in Europe. Asked about the implications of that collaboration on the ACC strategy, Carlo Tavares replied in a media briefing: “We are going to adjust our investment plans on EVs to the pace at which market sales of EVs grow. We do not control that speed.”