China’s Envision Group plans to invest $2.4 billion in battery plant for Renault in northern France

China’s Envision Group intends to spend as much as 2 billion euros ($2.4 billion) on a battery plant in northern France to control a moderate range of Renault SA electric vehicles.

The deal is part of the European carmaker’s EV strategy that will likewise see it acquire a stake of somewhat over 20% in a year-old French startup called Verkor for higher-performance power packs for bigger and premium models, as per a Renault statement.

French President Emmanuel Macron is scheduled to uncover the agreements on Monday at Renault’s assembly plant in Douai, where the Envision battery plant – the first in Europe for the organization that additionally makes wind turbines – will be found. In front of a national election next year, Macron is looking to reap political benefit from the possibility that approximately 4,500 jobs could be made by 2030 at the EV hub situated in a region that has long suffered from the industrial decrease.

Renault is the most recent among European automakers to outline a battery plan in recent months, a sign that competition to guarantee sufficient supply for their electric cars is heating up. Last week, Porsche and Volvo Car Group reported plans to produce power packs, while Peugeot producer Stellantis NV will update investors on its EV strategy on July 8. Volkswagen AG in March revealed a multibillion-euro plan for six European battery manufacturing plants.

Renault’s plans will “greatly bolster our position as we ensure the Europe-based production of 1 million electric vehicles by 2030,” Chief Executive Officer Luca de Meo said in the statement. EVs are a key part of his turnaround vision for the striving carmaker that made a record loss last year. They will make up 90% of Renault brand sales by decade’s end, he said.

Envision’s Plans

Envision AESC, the battery unit of the Shanghai-based parent, is anticipating production of 9 gigawatt-hours of batteries in 2024 and 24 gigawatt-hours by 2030 to outfit the future Renault 5 model. The organization swore to make 2,500 jobs before the decade’s over.

Envision’s plans for the Douai site could likewise go beyond Renault. Its building permit application is for a capacity of 43 gigawatt-hours before the decade’s over, an objective that Chief Executive Officer Lei Zhang said could be accomplished if deals are reached with different carmakers.

Envision is coming to France for Renault however is in talks with other significant automakers on providing batteries from the Douai installation, he said in an interview.

“We have high expectations for growth in batteries,” Zhang said, putting the group’s total annual sales at as much as $8 billion last year. “France is strategic for Envision.”

Renault’s decision to purchase batteries from the Envision AESC division can be followed by its alliance with Japanese automaker Nissan Motor Co., which sold a controlling stake in its AESC battery operations to Envision in 2018 yet held a 20% holding. Lei Zhang said global output is as of now a few gigawatt-hours and development of operations in the U.K. is possible.

Verkor Relationship

Renault’s deal with Grenoble-based Verkor could see the carmaker eliminating its present battery supply agreement with South Korea’s LG Energy Solution around mid-decade. No financial terms were given for Renault’s stake in the startup.

Verkor is planning to begin work on a battery processing plant in France in 2023 for 16 gigawatt-hours, with 10 gigawatt-hours going to Renault, it said in a separate statement. Production could reach 50 gigawatt-hours in 2030 with 20 gigawatt-hours going to the automaker. Renault said the power packs would be bound for bigger and pricier models in its range, including the Alpine brand.

In taking a stake in Verkor, Renault will join shareholders EIT InnoEnergy, Groupe IDEC, Schneider Electric, and Capgemini. Verkor and Renault declined to give subtleties on funding for the French battery plant.

Renault is likewise as yet conversing with ACC – a venture between historic opponent Stellantis NV and TotalEnergies SE – about a potential third battery tie-up for around 2027, as indicated by the statement.

French Industry

The Envision and Verkor projects would represent a welcome foreign investment into France’s beleaguered industrial sector and come in the midst of a European Union push to expand the region’s battery output, a business that has long been dominated by China’s Contemporary Amperex Technology Co. Ltd. and LG Energy Solution.

French government help to Envision and Renault for the EV projects could add up to around 200 million euros, a French official said.

The Douai vehicle assembly plant is one of three sites Renault plans to consolidate and transform into an EV hub called ElectriCity capable of producing some 400,000 vehicles every year. With the French state as its most impressive shareholder, Renault has come under pressure to preserve jobs and keep EV technology in the country.

The carmaker at present purchases batteries for its Zoe model from an LG Energy Solution factory in Poland, an arrangement that will continue to the forthcoming Megane EV lineup made planned for the following year, as per the statement.