Mercedes-Benz and Stellantis Rethink EV Battery Strategy Amidst Demand Shift in Europe

Mercedes-Benz and Stellantis have put a temporary halt to the development of two electric vehicle battery factories in Europe. They are reportedly considering the adoption of LFP (lithium iron phosphate) battery cells as a cost-reducing strategy, according to Bloomberg.

The battery provider for a pair of car manufacturers, Automotive Cells Company (ACC), which has its sights set on establishing three fresh battery production facilities across Europe with an investment of around 7.6 billion euros ($8.2 billion with today's currency rates), has halted building activities at its German location in Kaiserslautern and put a temporary hold on preliminary arrangements at the Termoli site in Italy, as per the latest information.

The interest in electric vehicles across Europe is experiencing a decline, with anticipated expansion primarily in the general consumer market sectors, according to ACC's Chief Executive Officer Yann Vincent. He made these remarks during a conversation at a Bloomberg New Energy Finance event. Vincent revealed to Bloomberg that both Mercedes and Stellantis are seeking more affordable battery options for their basic electric vehicle models.

Mercedes-Benz's EQE SUV Model Slated for

ACC is reevaluating its strategy. According to Vincent, producing LFP battery cells in Kaiserslautern is a possibility, with a definitive choice expected by the end of this year or early 2025. Should this go ahead, cell manufacturing could commence within a timeframe of 2.5 years. Additionally, on June 4, ACC issued a distinct announcement indicating that it had resumed deliberations regarding the Termoli plant's future, as reported by Bloomberg.

Volkswagen and Renault are also reevaluating their commitments to new battery plants in Europe. Volkswagen recently announced potential delays in scaling up their European battery production facilities. Furthermore, Bloomberg reported that both Volkswagen and Renault have stepped back from earlier intentions to offload stocks in their electric vehicle or battery divisions.

In 2022, battery-powered electric vehicles surpassed diesel vehicles in sales, marking a significant shift in Europe where diesel used to dominate. The anticipation for new releases such as the Renault 5 E-Tech is creating excitement across the European market.

2025 Model of Renault 5 with E-T

The cost scenario for electric vehicles in Europe seems more favorable compared to the United States. While electric vehicle prices have trended downwards recently, there is still a noticeable lack of low-priced electric vehicle options.

Similar to its competitors Mercedes and Stellantis, Ford is targeting the cost-effective electric vehicle market by producing models with LFP batteries within the United States. However, the model that has caught the most attention lately—apart from the re-introduced Chevrolet Bolt EV, which lacks extensive information—is the upcoming 2024 Chevy Equinox EV. This vehicle is expected to offer an entry-level option costing around $35,000, including the delivery fee.

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