Europe to take on Asia in battery production

Research and development will be funded by $3.5 billion from seven EU nations

The European Union will direct its energy toward developing batteries for electric cars as it looks to power back against competition from Asia.

The research and development into new and improved batteries will be funded by 3.2 billion euros ($3.5 billion) from seven EU nations－Belgium, Finland, France, Germany, Italy, Poland, and Sweden.

The European Commission, the EU's decision-making body, expects the private sector to kick in an additional 5 billion euros as the bloc attempts to address the fact that Asia produces around 80 percent of the world's auto batteries while Europe chips in only 3 percent.

Margrethe Vestager, an executive vice-president of the European Commission, announced the funding this week and said: "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 competitiveness."

Vestager, who is responsible for promoting technology in Europe and who is also the EU's competition commissioner, said the money "will ensure that this important project can go ahead without unduly distorting competition". Previously, the bloc has shied away from state-funded projects because of their tendency to stifle private-sector competition.

Vestager also said the EU will revisit 22-year-old fair-competition legislation to ensure rules make allowances for advances in technology and the more globalized economy.

The Financial Times quoted Maros Sefcovic, the EU's vice-president for inter-institutional relations and foresight, as saying: "Thanks to intensive efforts by seven member states, industry, and the commission, Europe's first major pan-European battery ecosystem is emerging, with lead projects in all segments of this strategic value chain."

The funding will support research involving 17 companies, including chemicals giant BASF, which will seek new materials; BMW, which will attempt to improve the production process; and carmaker Opel, which will work with the French battery maker Saft to produce innovations.

One of the outcomes of the project will see Germany producing batteries for electric vehicles on an industrial scale by the mid-2020s, something Peter Altmaier, Germany's economic affairs minister, says will be "a big success for Germany and Europe as a destination for investments in the auto industry".

"We want to produce the most innovative and sustainable batteries in Germany and Europe and so secure added value and jobs in Europe," he told the Financial Times. "That is why we are pursuing a comprehensive approach with our concept, from material to production to recycling. Now it's up to us to get concrete projects off the ground."

CityAM, a free, business-focused newspaper distributed in and around London, said the project, which will run until 2031, will fund R&D into the mining and processing of raw materials, production of advanced chemicals, the design of battery cells, and the recycling of used batteries.

DW News, the English-language offering of German broadcaster Deutsche Welle, said the fund was established after lobbying from France and Germany, who fear falling behind other nations in the transition from engines powered by fossil fuels to those that use electricity.