Mercedes-Benz steps closer to EV dream with US$8 billion battery venture

The luxury carmaker is stepping up its game this year, after years of being viewed as a laggard in the EV race.
27 September 2021

Mercedes-Benz is a step closer to its EV dream with the US$8b European battery venture (Photo by Patrik Stollarz / AFP)

  • For Mercedes-Benz particularly, the battery joint venture is a part of a bigger dream — a transition to electric vehicles, as the carmaker has been stepping up its game in 2021
  • Now the luxury carmaker is an equal shareholder of ACC along with Stellantis and TotalEnergie
  • With Europe leading the world in EV car sales, there is a rush to build a viable battery supply chain

German luxury carmaker Daimler AG, owner of Mercedes-Benz, will soon be a part of a European electric vehicle (EV) battery joint venture known as Automotive Cells Co. (ACC), tasked with securing supplies for electric Mercedes-Benz cars. Daimler will team up with Stellantis NV and TotalEnergies SE to boost the scale of their European battery venture.

The partnership has made the world’s biggest luxury carmaker an equal shareholder of ACC along with Stellantis and TotalEnergies, each with a 1/3 equity stake. ACC is also open to adding more partners. Mercedes specifically will invest roughly €500 million next year but expects its total spending to stay below €1 billion.

For context,  ACC is an outcome from the initiative taken in 2020 by Stellantis and TotalEnergies, together with its affiliate Saft, and supported by the French, German and European authorities, to create a European battery champion for EVs.  ACC’s objective, per its statement, is to develop and produce battery cells and modules for EVs with a focus on safety, performance, and competitiveness — all while ensuring the highest level of quality alongside the lowest carbon footprint. 

Now, the partners in Automotive Cells plan to increase the company’s industrial capacity to at least 120 gigawatt-hours by 2030, more than double the amount the two founding partners initially laid out. The updated ACC capacity plan will mobilize an investment of more than seven billion euros, which will be supported by subsidies and financed by equity and debt. 

Battery joint venture to bring Mercedes-Benz closer to its EV dream

For Mercedes particularly, it is a part of a bigger dream — its transition to electric vehicles after lagging behind its auto-competitors for years. The carmaker shared its ambitions in July, claiming to step up the German manufacturer’s transition to electric cars, doubling the share of sales planned by 2025, and while predicting a market in which new car sales would “in essence” be fully electric by the end of the decade. The company even plans to invest €40 billion (US$47 billion) in battery-driven vehicles between 2022 and 2080.

Mercedes stepped up its game this year with the launch of the EQS, the electric version of its flagship S-Class. The sedan brought together upscale appeal and competitive battery range to challenge electric leader Tesla. Then earlier in September, an all-electric 2023 Mercedes-Benz EQE sedan was launched as a smaller, albeit similarly distinctive, version of the Mercedes EQS

European self-dependence ambitions

There has been a flurry of similar activity across the industry to ensure a sufficient supply of batteries, and the Mercedes-Benz venture is just another one to add to the list. In Europe, EVs accounted for 17% of sales during the H1 2021. On the surface, the creation of this European battery champion will support the continent’s aims to address the challenges of the energy transition currently underway in mobility, ensuring the security of supply of a vital component for the electric car industry.

As reported by Bloomberg, analyst Philippe Houchoise said that Mercedes’ investment will help “get ACC off the ground” as a potential European leader in the battery race. For the region as a whole — especially after years of ceding the EV battery business to foreign companies — there is now a rush on to build a viable battery supply chain that will match Europe’s leading global position in electric vehicle sales.