Italy cuts funding for Stellantis, Mercedes EV battery plant

The Italian government is cutting funds to a Stellantis NV and Mercedes-Benz Group AG electric-vehicle battery plant, a project that has faced delays due to a slowdown in EV demand in Europe.

Public funds originally allocated to Automotive Cells Company SE, whose shareholders include the two automakers, will be shifted to other green energy initiatives after ACC failed to provide a clear timetable for the plant’s development, Industry Minister Adolfo Urso said Tuesday.

ACC, which had laid out plans to build three battery factories in Europe with a total investment of €7 billion ($7.8 billion), paused preparatory work earlier this year on a site in Termoli on the eastern coast of Italy. It also stopped construction in Kaiserslautern, southwest Germany.

ACC will resume discussions over possible funding plans with the Italian government in the first half of next year, Chief Executive Officer Yann Vincent said in a phone interview from Italy, where he had just met government representatives.

“I understand Italy’s decision to allocate the funds differently at this time,” Vincent said. “If we come back to see them next year with a project for a cheaper battery that works, for which we have clients, we got confirmation that the Italian state will help us.”

Meanwhile, Stellantis will continue building motors at the Termoli plant until 2028 to help mitigate the impact from the battery factory delay, a representative for the company said. The company faces mounting pressure in Italy from unions and politicians after a first-half slump in output at some of its local factories.

Giorgia Meloni’s government has clashed repeatedly with Stellantis in recent months as the carmaker shifted production to lower-cost sites in other countries amid an industry-wide slowdown in EV demand.

Production at Stellantis’s historical Mirafiori plant in Turin slumped 63% in the first half due to tepid demand for the electric Fiat 500. Last week, the group said it planned to halt production of the vehicle again over the next month because of a lack of orders in Europe.