BERLIN -- Daimler's Mercedes-Benz will take a 33 percent stake in battery cell manufacturer Automotive Cells Company (ACC), alongside the project's original founders Stellantis and TotalEnergies.
The purpose of the partnership is to develop cells and battery modules and "help ensure that Europe remains at the heart of the auto industry -- even in an electric era," Daimler CEO Ola Kaellenius said in a statement on Friday.
ACC will supply Mercedes-Benz with battery technology from the middle of the decade, Daimler said.
As part of the deal, Daimler will invest a mid-three-digit million euro sum in the project next year. The automaker said its overall investment was expected to stay below 1 billion euros ($1.2 billion).
ACC, which has also received 1.3 billion euros in French and German funding, is budgeted to require seven billion euros in equity, debt and subsidies to reach its desired capacity of 120 Gigawatt hours (GWh) by the end of the decade.
Mercedes will become an equal shareholder of ACC, along with Stellantis and TotalEnergies.
Daimler will hold two of six supervisory board seats for the battery maker. The companies will work together on battery technology development, including high silicon anode and solid-state batteries.
Daimler’s move comes amid a flurry of activity and deals across the industry to ensure sufficient supply of batteries as demand takes off. In Europe, EVs accounted for 17 percent of sales during the first half.
Daimler announced its goal in July of becoming 'all-electric' by 2030. The company plans eight gigafactories, including one in the U.S. and four in Europe with existing partners and one new unnamed partner, with a capacity of at least 200 GWh.
Though European carmakers assemble battery packs for electric cars, the manufacturing of battery cells -- the essential building blocks for batteries -- is dominated by Asian companies.
"Together with ACC, we will develop and efficiently produce battery cells and modules in Europe -- tailor-made to the specific Mercedes-Benz requirements," Kallenius said. "This new partnership allows us to secure supply, to take advantage of economies of scale."
ACC was launched in September 2020 as a joint venture between TotalEnergies and Stellantis, which owns the Peugeot, Citroen and Opel brands, as well as Fiat and Chrysler.
ACC already has ties to Germany: a 2 billion euro investment in a battery cell plant in Kaiserslautern, due to start production in 2025.
ACC's first factory, in Douvrin, northern France, is scheduled to start production in 2023.
ACC is planning on expanding its network in Europe, Daimler said.
Daimler's move follows the scaling down of its industrial partnership with the Renault-Nissan alliance. Renault and Nissan both sold their equity stakes in Daimler earlier this year to help finance their turnaround efforts.
Bloomberg contributed to this report