The European Commission, the EU’s executive, announced on Monday it had approved state aid totaling EUR 3.2 billion to a pan-European research and innovation project on electric batteries, a push seemingly intended to help the Union catch up with presently dominant producers in Asia.

The EC greenlighted the Important Project of Common European interest (“IPCEI”) jointly notified by seven EU member states, Belgium, Finland, France, Germany, Italy, Poland and Sweden, with an overall completion deadline in 2031 saying it was expected to attract an additional EU 5 billion in private investments.

The state aid subsidies from the seven EU member states in question will go to a consortium consisting of a total of 17 businesses.

“Battery production in Europe is of strategic interest for our economy and society because of its potential in terms of clean mobility and energy, job creation, sustainability and competitiveness,” Margrethe Vestager, the EU commissioner in charge of competition policy, said in the EC statement.

Batteries make up about 40% of the total cost of an electric vehicle. Some 80% of electrict batteries are presently manufactured in China, South Korea, and Japan, while Europe accounts for only about 3% of the total output. This has been a major cause of concern among the European automakers which employ more than 10 million people in the EU.

The EC’s approval of the massive state aid to the European electric battery industry is spearheaded by France and Germany in preparation for the imminent rise of electric cars.

“I am delighted that the Commission has verified and authorised the first major battery project in Europe in just a few weeks,” said German Economy Minister Peter Altmaier in a statement, as cited by AFP and France24.

He described the greenlighting of the massive electric battery subsidies as a “a great success for Germany and Europe.”

“The emergence of the European battery industry will contribute to the achievement of the objective set by the European Union to become the first carbon-neutral continent by 2050,” said in turn French Finance Minister Bruno Le Maire.

The subsidies are part of an EU campaign known as the European Battery Alliance, which was started back in 2017, and is supposed to lead to the creation of an “Airbus” of batteries, the same way today’s European aviation giant was born through the collaboration of a number of semi-private companies.

About EUR 1.25 billion from the EUR 3.2 billion in government electric battery subsidies approved by the EC will come from Germany.

The German companies involved in the massive project include carmakers BMW and Opel, chemical company BASF, battery maker Varta and the recycling branch of the mineral technology multinational Umicore, DW reported.

The companies receiving the subisidies will focus on raw and advanced materials, cells and modules, battery systems and repurposing, recycling and refining.

The new European Commission is due to announce in the coming days its Green New Deal agenda, which will aim at achieving carbon neutrality through climate-friendly investment.

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