President Emmanuel Macron's vision for France's automakers to join forces in building batteries for cars of the future is not going exactly as planned.
The more than 120-year rivalry between PSA Group and Renault has proved too fierce to overcome, even for a 5 billion-euro ($6 billion) project backed by their powerful shareholder, the French government.
Instead, PSA, now part of Stellantis, and oil giant Total are pushing ahead without Renault, which may pursue its own plans with South Korea's LG Chem.
Macron sought to form a united front because batteries will be one of the most powerful forces to reshape Europe's auto industry in decades. Getting significant regional production up and running to counter Asian dominance and meet the needs of a booming electric-car market will take years, and it's been made more difficult by the pain inflicted by the pandemic.
"Every carmaker with plans to make and sell electric vehicles in Europe will need to eventually source batteries in the EU," said Jean-Louis Sempe, a Paris-based analyst at Invest Securities. "To be competitive, they will have to internalize this as much as possible and it will cost a lot of money."
France and Germany, where the electric revolution is making obsolete thousands of jobs in areas like engine and transmission-making, have led the political push over the past few years for developing a local battery cell industry in a bid to take back control of a car part that can make up 40 percent of an EV's value. Yet other automakers are further along in sorting out battery-supply strategies than the French.
Volkswagen Group and BMW have teamed up with startup Northvolt, which has plans for factories in Sweden and Germany, while Tesla CEO Elon Musk has said he will produce cells at the company's auto plant that is under construction outside Berlin. BMW will also source batteries from China's Contemporary Amperex Technology Co. that is building a site in Erfurt, Germany.
In France, the inability of Renault and Stellantis to work together on what is effectively the country's only viable project to date has become increasingly clear. The companies have long battled to woo customers of affordable cars and even Macron's strong-arming them to work together in what was dubbed the 'Airbus of Batteries' has failed so far.
"Renault doesn't want to be in a supply agreement with PSA due to their historic rivalry," Sempe said. Their talks "may have ended in a clash, but for diplomatic reasons no one is saying so."
Carlos Tavares, the CEO of Stellantis, has left the door open for his competitor, stating "Renault is very welcome."
"Renault could bring us something from a technological point of view," said Yann Vincent, who heads the joint venture with Stellantis and Total called Automotive Cells Company. "But the business plan was built without them so we can move ahead without them."
At Renault, executives seeking to turn the money-losing automaker around have sent ambiguous signals. Chairman Jean-Dominique Senard has said the automaker wants battery production close to its factories in northern France and could join ACC if it's "treated at parity."
CEO Luca de Meo has said only that the company is in talks with many companies about future supplies. Other parties include LG Chem, which provides batteries for Renault's Zoe model from its plant in Poland, and tiny French startup Verkor.
A little more than a year after Macron journeyed to a small town in southwestern France to promote ACC, an official in his office said discussions are ongoing about participation in the project including with Renault. Macron has looked to back innovation in industries like battery cells, automation, and aeronautics as a way to safeguard jobs in France and keep factories going in regions outside the capital which have suffered from decline in the past decades.