Mercedes-Benz Plans $8.2 Billion European Battery Venture
(Bloomberg) -- Daimler AG will team up with Stellantis NV and TotalEnergies SE to boost the scale of their European battery venture to more than 7 billion euros ($8.2 billion) and secure supplies for electric Mercedes-Benz cars.
The world’s biggest luxury-car maker will take a 33% stake in battery manufacturer Automotive Cells Company, whose projects will be financed through equity, debt and subsidies, Daimler said Friday. ACC aims for capacity of at least 120 gigawatt hours in Europe by the end of the decade, more than double the amount the two founding partners initially laid out.
The venture, which has held talks with Stellantis’s French rival, Renault SA, is open to adding more partners. Mercedes will invest roughly 500 million euros next year and expects its total spending to stay below 1 billion euros.
“This investment marks a strategic milestone on our path to CO2 neutrality,” Daimler Chief Executive Officer Ola Kallenius said in a statement. “This new partnership allows us to secure supply, to take advantage of economies of scale, and to provide our customers with superior battery technology.”
Daimler’s move is the latest step by the maker of the EQS sedan to accelerate toward fully electric vehicles. Joining with Europe’s second-biggest carmaker will help Mercedes size up with Tesla Inc. and Volkswagen AG’s luxury brands. The deal adds to a flurry of activity across the industry to ensure sufficient supply of batteries. In Europe, EVs accounted for 17% of sales during the first half.
Mercedes’ investment will help “get ACC off the ground” as a potential European leader in the battery race, Jefferies analyst Philippe Houchois said in a note.
ACC is an initiative forged in 2020 by Total’s Saft unit and Stellantis, formed from the merger of PSA Group and Fiat Chrysler earlier this year. The project originally slated to cost 5 billion euros is also backed by France and Germany as part of the EU’s push to chip away at Asia’s dominance of EV batteries and create new jobs. The venture is going up against the likes of Sweden’s Northvolt AB, the venture co-founded in 2016 by former Tesla executives that’s won contracts with VW and BMW AG.
ACC will have to successfully juggle production of cells for Mercedes luxury cars as well as Stellantis’s mass-market brands, said Ferdinand Dudenhoeffer, director at the Center Automotive Research in Germany. “The cell materials for Mercedes are bound to differ significantly from the ones for Opel, Peugeot or Fiat,” he said.
Joining forces with Stellantis will put Daimler back in touch with Chrysler and may further distance the company from Renault. Daimler and Chrysler dissolved an ill-fated merger in 2007, while Renault and Nissan Motor Co. earlier this year sold their equity stakes in Daimler to help finance their turnaround efforts.
Daimler will occupy two of ACC’s six supervisory board seats. The cell maker will supply Mercedes from mid-decade and is weighing an expansion of its production network in Europe. The companies will work together on battery-technology development, including high-silicon anode and solid-state batteries.
The carmaker is also considering an expansion of its cooperation with China’s Farasis, Markus Schaefer, Daimler’s development chief, told reporters. He dismissed reports the battery-cell partnership faces technical roadblocks.
Mercedes in July unveiled plans to spend more than 40 billion euros this decade to electrify its lineup and defend its luxury-segment leadership. Its plans include building battery cars on three all-electric vehicle platforms from 2025 and setting up eight battery factories worldwide with partners.
After years being viewed as a laggard in the EV race, the inventor of the automobile stepped up its game this year with the launch of the EQS, the electric version of its flagship S-Class. The sedan blends upscale appeal with competitive battery range to challenge electric leader Tesla. It will be flanked by EQE, the battery-powered counterpart to the E-Class sedan, which was unveiled earlier this month in Munich.
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