ACC Battles Low Demand: Hybrid Strategy and Chinese Competition

ACC, a joint venture supported by Stellantis and Mercedes, has paused work on German and Italian factories to focus on lower-cost batteries due to slowing EV demand. With competitive pressure from cheaper Chinese lithium iron phosphate (LFP) batteries, ACC aims to adjust its investment plans according to market growth.

ACC, a battery joint venture backed by carmakers Stellantis and Mercedes , has paused work on factories in Germany and Italy as the company switches to lower cost batteries amid slowing demand for electric vehicles. The company said on Tuesday it needed to research and develop low-cost batteries to supply cheaper EVs and that it would confirm its industrial and construction timeline in late 2024 or early 2025.

ACC has been working on building a factory in Italy's Termoli and another in Germany's Kaiserslautern. It is currently ramping up production at its first factory in northern France. Growth in Europe's EV market has slowed significantly, with high interest rates and slashed government subsidies pushing consumers to opt for hybrids or petrol cars instead.

The European manufacturers are under pressure from growing exports by Chinese companies that largely use cheaper lithium iron phosphate (LFP) batteries, significantly reducing their cost of production. Stellantis has also agreed with China's CATL to build an LFP battery production plant in Europe.

"We are going to adjust our investment plans on EVs to the pace at which market sales of EVs grow," said Stellantis CEO Carlos Tavares, in response to a question at a media briefing on whether the company still supported three ACC factories in Europe in addition to the CATL joint venture. "We do not control that speed," he added.

Mercedes said in a statement that it was committed to ACC and that its electrification strategy remained on track. ACC, is 45%-owned by Stellantis and Mercedes holds a 30% stake. Saft, a battery subsidiary of France's TotalEnergies , owns 25% of the company.

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