French electric car battery start-up secures historic €2 bln financing

French electric battery maker Verkor announced on Thursday (14 September) it had secured €2 billion in financing, the largest amount an early-stage start-up ever received in France, in a sign of strength for the European battery industry in its race against Chinese competitors.

Verkor, a French e-battery start-up created in 2020, will use the money to create its first gigafactory in Dunkirk – France’s new industrial powerhouse – “and the manufacture of high-performance low-carbon battery cells,” a press release reads.

Of the €2 billion, €850 million stems from the so-called Series C funding, meant for already successful companies looking to grow further, with investments from a wide array of private actors including banking conglomerate Crédit Agricole Assurance, French public bank bpifrance and financial services mogul Macquarie Asset Management.

In parallel, the start-up signed a ‘long-term commercial partnership’ with French carmaker Renault Group.

Another €600 million will come from a European Investment Bank (EIB) loan, and the remaining €650 million will be made accessible in the form of subsidies from the government, pending European Commission approval.

“This financial support and the presence of prominent funding partners demonstrate the business viability of Verkor’s robust development plan,” the company said, hoping to create 1,200 direct jobs and support the EU’s sovereignty in “sustainable electric mobility”.

French President Emmanuel Macron posted on X (formerly Twitter): “With the support of France 2030 [a €54 billion investment plan] and the EU, it’s a new record of a French start-up. France is attractive, it is reindustrialising, decarbonising its economy and creating jobs!”

In November last year, Verkor had already secured a €49 million loan from the EIB to help build an ‘innovation centre’ in Grenoble, in the Alps.

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Following the financing of a new French innovation centre manufacturing electric vehicle batteries, EURACTIV France spoke about the opportunities and challenges for the sector with Ambroise Fayolle, vice president of the European Investment Bank (EIB), and Benoît Lemaignan, the centre’s CEO.

EU race against China

The announcement comes as the EU enters a global race for electric batteries against China and the US and aims to fuel up its clean tech industry.

“From wind to steel, from batteries to electric vehicles, our ambition is crystal clear: The future of our clean tech industry has to be made in Europe,” European Commission chief Ursula von der Leyen said in her State of the Union address on Wednesday (13 September).

The Commission also loosened state aid rules in March 2023 to stimulate green industry investments by member states so they could stand a chance against the US’s $400 billion investment and tax break Inflation Reduction Act (IRA), enacted just a year ago.

Six months in, fresh data obtained by Euractiv shows the subsidy race is on, with France coming in second place with 22.6% of all state aid being approved by the Commission – but well behind Germany, which is responsible for the lion’s share with a stark 48.4%.

In May, France announced it would launch its first battery factory for electric cars, owned by Automotive Cells Company, a partnership between French energy giant TotalEnergies, Germany’s Mercedes-Benz, and US-European automaker Stellantis.

ANALYSIS: EU subsidy race is on – and Germany is winning it

Germany is the number-one beneficiary of the relaxation of state aid rules, having received almost half of the total state aid approved since February 2022, according to fresh data from the European Commission – deepening concerns over market fragmentation.

[Edited by János Allenbach-Ammann/Zoran Radosavljevic]

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