ROME, Sept 17 (Askume) – The Italian government will reallocate about 200 million euros ($223 million) of European Union funds previously earmarked for Stellantis (STLAM.MI).
ACC, a battery joint venture in which Stellantis is the largest investor, plans to build three gigafactories in Europe in France, Germany and Italy.
In June, the company said it would cease operations in Italy and Germany as demand for electric vehicles waned and it was switching to lower-cost batteries.
Several European companies have invested in lithium-ion battery production, but demand for electric vehicles is growing slower than some in the industry expected and there is stiff competition from battery producers and automakers in Asia and North America.
“We definitely have to plan capacity increases depending on sailing demand,” Stellantis Chief Executive Carlos Tavares said at a corporate event in Turin, Italy, on Tuesday.
“As electric vehicle sales grow in Europe, once I feel more production capacity is needed, I will start investing in two more factories in Germany and Italy,” he said.
The ACC confirmed the uncertainty over the timing of the construction of the gigafactory in Germany and the Italian city of Termoli at a meeting of the industry ministry on Tuesday, government officials said.
The joint venture, whose shareholders include Mercedes (MBGN.DE) and TotalEnergies (TTEF.PA) , said in a statement that it was set to begin construction of the gigafactory at the end of June but that “the pace of construction was slowing down.” The pace of electrification “is facing a change in mobility due to technological advances demanded by customers.
Earlier, Sweden’s Northvolt, Europe’s most advanced battery company, announced last week plans to reduce the size of its business and cut costs.
Italian Industry Minister Adolfo Urso said he would use EU funds to support individual investments in line with Rome’s energy strategy for a green economy.
Italy has allocated 200 million euros from the EU’s post-COVID-19 recovery fund for the gigafactory and has pledged another 200 million euros in national and regional funds.
The minister said that if ACC was later able to submit a new industrial plan for Termoli, separate domestic state funds could be set aside for it.
The joint venture said the availability of state public subsidies is “very important to support the competitiveness of ACC’s investments in Italy”.
During the discussions, Stellantis assured the government that it would continue producing endothermic engines at Termoli, taking into account current employment levels and the transition to the Gigafactory.
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