EU Commission approves €659m French aid for electric vehicle batteries

The European Commission has approved, under EU State aid rules, a €659 million French measure to support Verkor in researching and developing new production processes of lithium-ion batteries for electric vehicles. The measure will contribute to the achievement of the strategic objectives of the European Green Deal and the EU battery strategy.

The French measure

France notified to the Commission its plan to support Verkor’s research and development (‘R&D’) project to develop innovative industrial processes for the production of performant lithium-ion battery cells and modules necessary for the large-scale deployment of electric vehicles.

Under the measure, the aid will take the form of a direct grant of up to €659 million that will cover the R&D project until the end of 2026.

As part of the R&D project, Verkor will focus on: (i) automatising electrode production and battery formation through the digitisation of processes; (ii) enhancing recycling techniques; (iii) recovering materials; and (iv) designing an innovative pilot production line which will pave the way for large scale battery production.

Verkor has committed to actively share the technical know-how gained through the project with industry and academia.

The Commission’s assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU’), which enables Member States to support the development of certain economic activities subject to certain conditions, and the Framework for State aid for research and development and innovation (‘RDI Framework’).

The Commission found that:

• The measure facilitates the development of an economic activity, in particular R&D activities for the development of innovative, competitive, sustainable, and Industry 5.0 compatible processes for the production of lithium-ion battery cells and modules for electric vehicles.
• The aid has an ‘incentive effect‘, as the beneficiary would not carry out the investments in R&D activities for lithium-ion batteries without the public support.
• The measure is necessary and appropriate to promote the relevant R&D activities. In addition, it is proportionate, as the level of the aid corresponds to the effective financing needs.
• The measure has sufficient safeguards to ensure that undue distortions of competition are limited. In particular, if the project turns out to be very successful, generating extra net revenues, the beneficiary will return part of the aid received to France under a claw-back mechanism. Finally, Verkor will disseminate the technical know-how gained through the project.
• The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU.

On this basis, the Commission approved the French measure under EU State aid rules.

Background

The Communication on State aid rules for research, development and innovation (‘2022 RDI Framework’) sets out the rules under which Member States can grant State aid to companies for RDI activities, while ensuring a level playing field.

The RDI Framework aims at facilitating research, development and innovation activities, which, due to market failures, would not occur in the absence of public support. It enables Member States, subject to certain conditions, to provide the necessary incentives to companies and the research community to carry out these important activities and investments in this field. The RDI Framework applies the principle of technological neutrality and thus relates to all technologies, industries and sectors to ensure that the rules do not prescribe in advance which research paths would result in new solutions for innovative products, processes and services.

The non-confidential version of the decision will be made available under the case number SA.106361 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.