The FDI angle:
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- The north of France has attracted four major gigafactory investments by Automotive Cells Company, Verkor, Envision AESC and ProLogium.
- The region's location, large workforce, industrial and automotive tradition and available land plots are key drawcards, but also the French government's willingness to offer large incentives.
- Why it matters: The future of the European car industry hinges on its ability to develop a local battery industry.
At the northern tip of France, a steady stream of investments has turned an area of industrial decline into a leading contender in Europe’s bid to establish a local electric vehicle (EV) battery supply chain. The former coal-mining region of Hauts-de-France, which is wedged between Belgium to the north and the English Channel to the west, has attracted four gigafactory announcements in little over two years.
French officials have declared it Europe’s ‘battery valley’. Investors are echoing their claims. “Northern France has the potential and momentum to become one of the largest [battery] ecosystems” on the continent, says Gilles Normand, president of ProLogium’s European business. The Taiwanese solid-state battery maker is behind the most recent pledge, announcing in May plans to invest €5.2bn in Dunkirk to build its first large-scale facility overseas.
Northern France has the potential and momentum to become one of the largest [battery] ecosystems.
It joins France’s Verkor, which is slated to start building its gigafactory near the port city this summer, and Sino-Japanese battery manufacturer Envision AESC, whose €2bn plant in the city of Douai has been under construction since last year. Automotive Cells Company (ACC), a joint venture between Stellantis, Mercedes and TotalEnergies, recently inaugurated its gigafactory — rumoured to value €2bn — near the city of Lens.
Think local
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France’s projected EV battery capacity for 2030 now sits at 162 gigawatt hours (GWh) and is confined to a 100-kilometre stretch along the Belgian border. Benchmark Mineral Intelligence data shows that in Europe it trails only Germany, whose 325GWh pipeline is scattered across the country, and Hungary with 207GWh concentrated around Debrecen. Benchmark analyst Evan Hartley says Hungary’s second city and Hauts-de-France are the major areas in Europe experiencing battery supply chain localisation.
Nord France Invest, the region’s investment promotion agency, is not resting on its laurels. “Four gigafactories is great, but it isn’t enough. Our objective is to double this figure,” says CEO Yann Pitollet. Its ambitions have been boosted by recent investment pledges along the battery value chain. In May, China’s XTC and France’s Orano announced they were partnering to invest €1.5bn in Dunkirk to manufacture cathode materials for its lithium-ion batteries.
Local midstream production like this is “one of the key pull factors” for gigafactories, says Mr Hartley. Meanwhile, downstream, Canadian firm Li-Cycle announced in March it will build a battery recycling facility near Lens. “Little by little, the entire value chain is setting up in the battery valley,” says Guillaume Gau, an executive at a French industrial start-up and foreign direct investment commentator.
Drawcards
The genesis of Hauts-de-France’s battery ecosystem is the presence of key customers including Stellantis, Toyota and Renault — all of which have assembly plants in the region. The need to transform its automaking industry, which manufactures 31% of the country’s vehicles, is what spurred Nord France Invest’s decision in 2018 to target battery manufacturers. “There is a lot at stake,” says Mr Pitollet. “If you don’t have the battery, you don’t have the car assembly.”
For ProLogium, Dunkirk’s biggest selling point is access to low-cost, low-carbon energy thanks to its proximity to Gravelines — one of Europe’s biggest nuclear power stations — and France’s offshore wind programme underway in the English Channel. “We need to be contributing to the carbon-neutral roadmap of all carmakers,” says Mr Normand, a French national himself. Other drawcards are Dunkirk’s deep-sea harbour, which eases exporting and importing, and the region’s large plots of available land in industrial zones, which paves the way for smoother permitting and public consultations.
The decline of two of Hauts-de-France’s historical industries — coal and steel — has also given battery manufacturers a large workforce with an industrial tradition to tap into. In March, the region’s unemployment rate was 8.7% compared to the national average of 7.1%, according to government statistics.
Incentives talk
The region’s merits have been enhanced by president Emmanuel Macron’s willingness to fully exploit incentives. In 2022, the country ranked fourth globally for incentive deals, behind the US, UK and Canada — according to IncentivesFlow, an fDi Intelligence database.
This year, France has embraced the EU’s loosening of state aid rules under the bloc’s Green Deal Industrial Plan more than any other member state. In July, its parliament approved a new 45% investment tax credit, which Mr Gau says is France’s answer to the US’s $396bn incentives package, the Inflation Reduction Act (IRA).
“The common objective between French and regional authorities is to be as competitive as possible, especially compared to the US’s IRA,” says Mr Pitollet. “The public authorities are trying to go to the maximum that the EU allows.” ACC’s gigafactory reportedly received €840m in government support and the European Commission approved a €1.5bn subsidy for ProLogium on August 2. For the Taiwanese firm, the government’s financial support was instrumental in choosing Dunkirk over shortlisted sites in Germany, the Netherlands, UK and Poland. Mr Normand says France was the only country that offered the opportunity to join the EU’s Important Projects of Common European Interest programme for batteries, which increased the volume of subsidies it could offer. “This made a big difference,” he says.
France’s experience adds further proof to the importance of subsidies in luring battery investments. Mr Hartley notes that “subsidies are part of the reason the battery industry kicked off in Hungary”, which has benefited from central and eastern Europe’s long-standing carveouts from EU state aid restrictions. “[President] Macron is now doing the same and it is clearly working,” he says.
Lessons in diplomacy
In pursuing France’s goal of becoming self-sufficient in EV battery production by 2027, the government is also winning over investors by showing joined-up thinking at the local, regional and national level. “We discovered that France is really working as a team,” reflects Mr Normand. “From the local level to president Macron … we could see very strong support across the line, which was important,” he adds.
President of the regional council of Hauts-de-France, Xavier Bertrand, is negotiating directly with battery producers as part of his bid to modernise the local economy. After unsuccessfully running for the French presidency in 2022, he launched a new political movement called ‘Nous France’, and is expected to enter the 2027 race.
Mr Gau notes that turning around an ailing economy would boost his campaign. “The regional economic strategy is perfectly aligned with his national ambitions,” he adds. This heady mix of politics, subsidies, industry and geography may just give Hauts-de-France the edge in driving European mobility into the electric era.
This article first appeared in the August/September 2023 print edition of fDi Intelligence