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Momentum builds for European battery cell production as France pledges funding

The French government will join Germany in offering financial support to European companies aspiring to produce lithium-ion battery cells in a bid to reduce dependence on imports from Asia as electric cars gain increasing market share.

French Finance Minister Bruno Le Maire and German Energy Minister Peter Altmaier on Dec. 18 agreed on a strategy to foment battery cell production during a meeting in Paris. They hope to identify industrial consortiums eligible for the capital injection before the end of March 2019.

"[I]t is the primary responsibility of private companies to develop new technologies and make them ready for the market, and thus also to develop and establish a competitive industrial battery cell production. The task of the governments is to create the right environment for these developments to be made and to provide start-up support for a limited period of time," the governments said in a joint declaration following the meeting.

Germany announced Nov. 13 that it would allocate €1 billion through 2021 for local companies with a competitive proposal for lithium-ion cell production, and said it would seek to involve other European countries including France to garner further startup capital.

France has not yet pledged a specific sum, but the joint statement said it "confirmed its readiness to dedicate substantial financial support for battery cell projects in France."

Where possible, the governments will seek Important Project of Common European Interest status for qualifying projects, which would exempt them from EU rules that restrict state financial support to private companies.

The German government has estimated that consortiums would need about €500 million to start battery cell production.

Asian companies dominate global production of lithium-ion cells, which individual car manufacturers assemble for their vehicles. With batteries accounting for a hefty proportion of the value of an electric car, Europe's push into battery production aims to partially offset the loss of value its industry adds through the design and manufacture of combustion powertrains.

Global demand for lithium-ion batteries is forecast to surge more than 17-fold between 2017 and 2025 to almost 600 gigawatt-hours, with 96% of that demand coming from electric vehicles and the remainder from energy storage on the electricity grid, according to Bloomberg New Energy Finance.