French car battery start-up Verkor secures €2bn for first plant

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French car battery group Verkor has raised more than €2bn in financing for its first plant as European start-ups rush to develop the region’s own industry amid a growing threat from Chinese rivals.

Verkor’s latest fundraising round, which includes €650mn in French government subsidies and fresh money from investors including Macquarie Asset Management, will mainly be used to build a factory in France’s northern port city of Dunkirk.

Chief executive Benoit Lemaignan said in an interview that securing state support had helped it attract private investors, and that the subsidies were encouraging given Europe’s efforts to try to compete with US president Joe Biden’s clean energy initiative, known as the Inflation Reduction Act.

“It’s a sizeable level of public support, which shows we’re not penalised compared to the IRA and support [for companies] in the US,” Lemaignan said. Verkor is among companies that have been wooed by the US in recent months, and have welcomed attempts in Brussels to compete by loosening state aid rules. 

Other investors include platinum producer Sibanye-Stillwater and carmaker Renault, with which it has signed a supply contract, as well as French infrastructure specialist Meridiam. The funding includes a €600mn loan from the European Investment Bank. 

European battery groups say there is still space for localised supply chains, nevertheless, they face an uphill struggle to compete with the advances already made by Asian competitors, including China’s CATL.

Before settling on Dunkirk last year, Verkor had looked at 40 other locations in western Europe, Lemaignan said. Local energy resources, including the availability of low carbon nuclear power, had helped swing the decision, he added.

Similar reasons were also cited by Taiwanese battery maker ProLogium which chose the French city earlier this year for its plant. It is set to receive €1.5bn in French state subsidies. 

Verkor was also counting on a low cost “heat waste” and vapour system developed in Dunkirk and which involved reusing heat produced by industrial processes in the area, Lemaignan added. The heat can be used in the manufacturing of lithium-ion batteries. 

The fundraising took slightly longer than expected, as investors had become more cautious in recent months, in part because of the rapid rise in interest rates, he said.

Verkor’s Dunkirk plant is due to have an annual production capacity of 16 Gigawatt hours, or the capacity to equip 200,000-300,000 electric cars a year, although this could later be expanded. The first deliveries are planned for the second half of 2025.