The European Union has approved 3.2 billion euros ($3.5 billion) in subsidies from seven member countries that want to develop the electric battery industry and challenge China's supremacy.
The EU said Monday that the plan subsidized by Belgium, Finland, France, Germany, Italy, Poland and Sweden will support research and innovation in a crucial sector where Europe is lagging behind Asian competitors and largely relies on imports.
According to the EU, the member states' funding should unlock an additional 5 billion euros in private investment.
“Battery production in Europe is of strategic interest for our economy and society because of its potential in terms of clean mobility and energy, job creation, sustainability and competiveness.,” said Margrethe Vestager, the EU Commissioner in charge of competition policy. “The approved aid will ensure that this important project can go ahead without unduly distorting competition."
The commission said the state money will be channelled to 17 different companies covering the whole production chain, from mineral extraction to battery manufacturing and recycling.
The commission's new president, Ursula Von der Leyen, has made combating climate change one of her priorities and the development of batteries for electric vehicles fits in her plan to reduce carbon emissions in the EU by at least 50 percent by 2030, compared with 1990 levels.
Von der Leyen, who will present details of her so-called European Green Deal later this week, wants to make the EU climate neutral by 2050.
“The emergence of the European battery industry will contribute to the European Union's objective of becoming the first carbon-neutral continent by 2050," France's economy ministry said in a statement. “Thanks to this project, we are combining industrial development and green growth. The European automotive industry will no longer be forced to import batteries produced on the other side of the world and will be able to offer Europeans truly green electric vehicles."
In partnership with Germany, France said it will be funding research and development work on lithium-ion batteries - a type of rechargeable battery - with automaker PSA and battery manufacturer Saft. Two factories will be built in each of the countries.