The European Union has invested 2.9 billion euros to set up a second battery alliance, BMW Tesla and others will benefit.

The EU has reportedly approved 2.9 billion euros worth of subsidies from 12 member states for a second pan-European project to develop the battery industry and wean itself off Asian imports.

In December 2019, the EU Executive Commission had approved a 3.2 billion euro plan funded by seven countries to support research and innovation in the battery sector, an area in which Europe lags behind its Asian competitors.

The EU expects demand for batteries to grow rapidly in the coming years. The latest public funding is expected to open up an additional 9 billion euros in private investment and create as many as 10, 000 jobs, the EU said on January 26th.

According to the European Commission, the second battery project, called "European Battery Innovation", involves countries such as Austria, Belgium, Croatia, Finland, France, Germany, Greece, Italy, Poland, Slovakia, Spain and Sweden. It will cover the entire production chain from mineral mining to design, battery manufacturing and recycling. The project involves 42 companies, including Tesla, BMW, FCA, Northvolt, ElringKlinger and Manz.

The European Battery Innovation project will benefit not only local companies such as BMW, but also non-European companies such as Tesla. Tesla, based in California, is building its first European factory in Berlin, Germany. The company expects the new plant to produce 150000 electric vehicles a year from mid-2021 and plans to increase production to 500000.

"if companies come here with the right projects, this can be achieved and will benefit a wider range of European companies," said Margrethe Vestager, the EU's commissioner for competition policy. " Tesla also plans to develop new batteries and battery packs. The assistance received for the project has nothing to do with car production, but involves the company's plans in the areas of batteries and recycling.

China dominates the global production of a new generation of batteries and accounts for most of the global lithium smelting. Maros Sefcovic, vice president of the European Commission, said: "thanks to the focus on next-generation batteries, this powerful pan-European project will help transform the battery market. It will also enhance our strategic autonomy in this area and is critical to Europe's green transformation and long-term resilience. "

The development of electric vehicle batteries is in line with the European Commission's plan to achieve EU carbon neutrality by 2050 and reduce EU net greenhouse gas emissions by at least 55 per cent from 1990 levels by 2030. The European Union plans to develop a battery industry that will power at least 6 million electric vehicles a year by 2025, Sefcovic said.