Italy cuts $223 million funding for EV battery plant

Italy's government will reallocate around 200 million euros (USD 223 million) in EU funds to a Stellantis and Mercedes-Benz EV battery project that has faced delays due to a slowdown in EV demand in Europe. 

Funds initially allocated to Automotive Cells Company (ACC), whose shareholders include the two automakers Stellantis and Mercedes-Benz, will be relocated to other green energy initiatives after ACC failed to provide a clear timetable for the plant’s development, Italy’s Industry Minister Adolfo Urso said, according to a Bloomberg report.

ACC had laid out plans to build three battery factories in Europe with a total investment of €7 billion (USD 7.8 billion). But it paused preparatory work this year on a site in Termoli, Italy; and halted construction in Kaiserslautern, Germany.

CEO Yann Vincent told Bloomberg that ACC will resume discussions over possible funding plans with the Italian government in the first half of 2025. 

“I understand Italy’s decision to allocate the funds differently at this time,” ACC CEO Yann Vincent said. “If we come back to see them next year with a project for a cheaper battery that works, for which we have clients, we got confirmation that the Italian state will help us.”

Meanwhile, Stellantis will continue building motors at the Termoli plant until 2028 to soften the impact from the battery factory delay, a company official said. 

Italy’s government has clashed with Stellantis in recent months as the automaker shifted production to lower-cost sites in other countries amid a slowdown in EV demand. 

“We have of course to schedule the capacity increase in accordance with the cell's (demand) ramp up," Stellantis CEO Carlos Tavares said, according to a Reuters report. "As soon as EV sales increase in Europe, as soon as I see that I need more capacity, I will trigger the investment of the two additional plants in Germany and Italy," he said.

Production at Stellantis’s Mirafiori plant in Turin dropped 63% in the first half following lukewarm demand for the electric Fiat 500. Last week, the group said it planned to halt production of the vehicle again because of a lack of orders in Europe.