Stellantis (STLA) will turn over a facility that it had planned to make batteries for electric vehicles to making dual-clutch transmissions for hybrid vehicles, reported Reuters, in the latest sign that EV demand in Europe is faltering and automakers shift to cheaper technology in response.
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The Stellantis-led joint venture ACC had planned to build one of its three EV battery-making plants in Europe at the facility in Termoli, Southern Italy, but put the plans on hold last year. ACC is the battery cell joint venture between Stellantis, Mercedes-Benz (MBGAF), and TotalEnergies (TTE).
One so-called gigafactory is up and running in France, however the company placed plans to build EV batteries at its Italian site and at a facility in Kaiserslautern in Germany on ice last year as ACC switched to lower cost batteries due to slackening EV demand.
Stellantis will instead produce electrified dual clutch transmissions (eDCT) at Termoli, sources told Reuters.
STLA Moves on Battery Tech
Italy’s government last year made the decision to cut funding for the Termoli plant, having originally allocated €200 million ($209 million) in European Union (EU) funds for the project.
However, delays to the plant and ACC’s decision to pause work on the facility amid declining EV demand saw the Italian government choose to reallocate the funds elsewhere.
ACC had initially planned to invest a total of €7 billion across three gigafactories in France, Germany, and Italy. The plants were going to be focused on expensive but energy efficient nickel-cobalt-manganese (NMC) chemistry, however it would appear recent developments in cheaper lithium iron phosphate batteries is forcing a rethink. In December Stellantis and Chinese battery manufacturer CATL announced a joint venture to build an all-new LFP battery plant at the carmaker’s site in Zaragoza, Spain.
LFP technology is used in some Tesla (TSLA) models, including the standard range Tesla Model 3 and Y. LFP batteries are considered cheaper, safer, and more durable than most other types of batteries, but have a lower energy density. But progress on improving the energy efficiency has seen companies shift more in favor of the technology – notably Renault (RNLSY) recently announced that it would shift away from only using NMC to also offering LFP tech.
Is STLA a Good Buy?
Overall, Wall Street has a Moderate Buy consensus rating based on 13 Wall Street analysts offering 12-month price targets for Stellantis in the last 3 months. The average STLA price target is $14.50, which implies about 3% upside from current levels.
