Europe Frets U.S. Battery Factory Subsidies Will Hurt, Not Help

The future of European auto manufacturing is at stake, particularly for German companies. Mercedes-Benz, BMW and Volkswagen have already lost market share in China to local automakers like BYD. Chinese automakers, including BYD and SAIC, are also making inroads in Europe. Selling cars under the British brand MG, SAIC has amassed 5 percent of the European electric vehicle market, putting it ahead of Toyota and Ford in that fast-growing segment.

European carmakers are frantically trying to build the supply chains they need to churn out electric vehicles.

In France, President Emmanuel Macron wants to convert a northern region where factory jobs have been in decline into a hub of battery production.

On Tuesday, Automotive Cells Company, a joint venture between Stellantis, Mercedes-Benz and TotalEnergies, inaugurated a factory in Billy-Berclau Douvrin, France, that aims to produce 300,000 electric batteries annually by the end of 2024. A.C.C. also plans to invest a total of 7.3 billion euros, or $7.8 billion, in Europe, including opening factories in Germany and in Italy, a deal sealed with 1.3 billion euros in public aid.

In Salzgitter, Germany, some 25 miles from Volkswagen’s headquarters, steel beams tower above concrete foundations as excavators and dump trucks hum nearby. In a matter of months, the outlines of a battery factory have risen out of a field.

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