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EU approves plan to provide state aid to Tesla, BMW and others

The European Union has approved a plan that includes providing state aid to Tesla, BMW, and others for supporting the production of electric vehicle batteries, helping the bloc to reduce imports, and rival with industry leader China.

The European Commission’s approval of the 2.9 billion euro ($3.5 billion) European Battery Innovation project, comes after the launch in 2017 of the European Battery Alliance that intends to support the industry during the shift away from fossil fuels.

“The EU Commission has approved the entire project. The individual funding notices and funding amounts per company will now follow in the next step,” a German economy ministry spokeswoman said of the project that is will run until 2028.

Together with Tesla and BMW, the 42 companies that have signed up and could receive state aid include Fiat Chrysler Automobiles (FCA), Arkema, Borealis, Solvay, Sunlight Systems, and Enel X.

China now hosts some 80% of the world’s lithium-ion cell output, but the EU has said it could become self-sufficient by 2025.

Project funding is set to come from France, Germany, Austria, Belgium, Croatia, Finland, Greece, Poland, Slovakia, Spain, and Sweden. It also aims to attract 9 billion euros from private investors, the European Commission said.

The German spokeswoman said Berlin had made almost 1 billion euros available for the initial battery cell alliance and prepared to support this project with about 1.6 billion euros.

“For those massive innovation challenges for the European economy, the risks can be too big for just one member state or one company to take alone,” European Competition Commissioner Margrethe Vestager informed a news conference.

“So, it makes good sense for European governments to come together to support the industry in developing more innovative and sustainable batteries,” she added.

The European Battery Innovation project concerns the extraction of raw materials to design and production of cells, to recycling and disposal.

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