The European vehicle battery venture Automotive Cells (ACC) said Tuesday that it was halting construction of two factories in Germany and Italy as it weighs shifting to a less-expensive battery technology.

The new ACC sites are among dozens of battery projects emerging in Europe as it seeks to reduce reliance on Chinese producers that dominate the market.

EV market demand has shifted toward so-called LFP (lithium iron phosphate) batteries, which are less powerful but also less expensive and longer lasting than NMC batteries, and increasingly found on cars made by industry leaders Tesla and China's BYD.

"The European automotive industry is facing a slower growth in demand for electric vehicles and simultaneously, increasing competitive pressure," leading the company to review its "development roadmap", ACC said in a statement.

As a result, it has stopped work on the factories in Kaiserslautern, Germany, and Termoli, Italy, to evaluate the viability of developing LFP technologies at the sites.

"ACC is adapting its battery supply strategy to add new low-cost cell chemistries to the portfolio, in response to shifts in market demand toward less expensive vehicles," its secretary general Matthieu Hubert told AFP.

He said there would be a "new phase of research over the coming months so that we'll be able to produce these more affordable products".

ACC is a partnership between French energy giant TotalEnergies, Germany's Mercedes-Benz and US-European automaker Stellantis, which produces a range of brands including Peugeot, Fiat and Chrysler.

It began producing batteries at its first "gigafactory" in northern France last year, for the Peugeot 3008 midsize family car, and a second production line is set to start operating in the coming months.

In February, the company said it had secured 4.4 billion euros ($4.8 billion) in financing to build out its capacity, for a total of 13 production lines.

© 2024 AFP