Europe bags €10 billion in giga factory investments

Europe has bagged around 10 billion euros in investment for two giga factories that will supply batteries to car manufacturers from 2026.

The deals come after the bloc loosened rules governing state aid to green industry projects, in a bid to win the subsidy race with the US, Reuters reports.

The plants are being set up by Sweden's Northvolt, which selected Heide in northern Germany after considering locations in North America, and Taiwan's ProLogium, which settled on Dunkirk, France.

Both deals required sweeteners before the companies committed to the investment. Northvolt's factory is contingent on the approval of subsidies, estimated by one source to be over 600 million euros.

In the case of ProLogium, France beat competition from Germany and the Netherlands because it offered deal sweeteners and competitive power prices, besides having President Emmanuel Macron involved in the country's bid.

This will be ProLogium's first overseas plant, but the fourth battery factory in northern France, strengthening the country's cluster of battery technology.

European carmakers such as Volkswagen and BMW are trying to lower their dependency on Asian nations for battery supplies, but the bloc will still depend on Asia for sourcing and processing battery raw materials such as lithium, cobalt and manganese.

The good news might not have ended. Europe could get a third giga factory if Volkswagen commits to the continent. The carmaker, which owns Audi, Porsche and Lamborghini, besides its namesake brand, was expected to announce a location late last year.

In March, the German group said it was waiting for clarity on subsidies before making its decision.