VERKOR EV BATTERY GIGAFACTORY

Promoter – Financial Intermediary

VERKOR SAS

Location

• France

Description

The project concerns the design, construction and operation of a 16 GWh electric vehicles battery cell manufacturing plant in Dunkirk.

Additionality and Impact

The Project is eligible under the Bank's policy objective "Research, innovation and digital" of the Public Policy Goal "Innovation, Digital and Human Capital" as it concerns the implementation of an innovative advanced manufacturing technology in Europe for the production of cutting-edge Li-ion battery cells.

The Project contributes to the development of the EU-based battery industry, for which it can be considered an enabler. The project caters for the transition to e-mobility by supplying the growing demand in Europe for EV Batteries with cutting-edge battery cells, thereby supporting the competitiveness of the EU automotive industry.

Due to its enabling character for the transition to e-mobility the Project fully contributes to Climate Action (mitigation) objective. It meets the objectives of the Green Deal Industrial Plan proposed by the European Commission.

The Project is located in a Cohesion Region and a Just Transition Mechanism territory, where it will create significant long-term skilled employment. The knowledge spill overs in the region and Europe at large are related to the development cooperation with the automotive OEM, the equipment suppliers, the EPC constructor for the development and construction of the specialised building (clean room, utilities), and with regional technical schools for the up/re-skilling of the labour force. It therefore contributes in full to Economic and Social Cohesion objective.

The eligible area of the operation as per Annex II of the InvestEU Regulation and the Investment Guidelines is Environment and resources, in particular with respect to the decarbonisation of energy-intensive industries and the substantial reduction of emissions in such industries, including the demonstration of innovative low-emission technologies and their deployment.

Europe must master the de-carbonisation of its transport sector. This passes through the transformation of its automotive industry from supplying vehicles running on carbon fuels to vehicles running on electricity. This, in turn, requires the build-up of a European battery industry. Europe lags in the industrialisation of battery technologies and the related know-how. 

The Project addresses these failures.

The Project:

(a) has the nature of a public good for that the operator or company cannot capture sufficient financial benefits (knowledge dissemination through technology transfer and education and skills of the local labour, and a lasting specialised infrastructure being made available at no or negligible cost ? both in a Cohesion Region; support to EU-based automotive industry in its transition to e-mobility);

(b) generates externalities which the operator or company fails to internalise, such as climate mitigation.

The financing also addresses the market failure of insufficient investment in a transition region, thus supporting the strengthening of the EU's economic, social and territorial cohesion.

The Project's external benefits are potentially high as it contributes to the establishment of an industrial value chain in Europe of a competitive battery technology. The Project will lead to important knowledge development and transfer to Europe. It will deploy advanced manufacturing activities and related jobs in Europe. The Project will furthermore help create the conditions for the deployment of e-mobility, and the development of a cleaner and more sustainable transport system in Europe and lead to lower emissions of pollutants (health benefits) and CO2 (climate benefits) on the roads.

The proposed non-recourse structure is innovative for this type of Project, traditionally financed through corporate loans by commercial banks at sponsors' level. EIB's capability to appraise and structure the Project with unmatched terms and conditions on the commercial market would bring significant added value to the Promoter. EIB will not only close a large financing gap but also crowd in other financiers. The increased risk profile of the loan beyond what the Bank traditionally regards as acceptable, can be considered thanks to InvestEU protection.

Considering the above, the Project will generate economic benefits that are greater than those captured by the investor's financial returns.

The operation would not be carried out to the same extent by the EIB without the InvestEU support.

Objectives

The production of advanced high-tech lithium-ion electrodes and battery cells will contribute to develop a European battery industry. The aim is to cater for the transition to e-mobility by supplying the growing demand in the EU for Battery Electric Vehicles with cutting-edge battery cells.

Sector(s)

• Industry - Manufacturing

Proposed EIB finance (Approximate amount)

EUR 600 million

Total cost (Approximate amount)

EUR 1941 million

Environmental aspects

The project concerns capital investments for the production of lithium-ion electrodes and battery cells, falling under the environmental impact assessment (EIA) Directive 2014/52/EU amending the EIA Directive 2011/92/EU. All environmental, health and safety issues including environmental and operational authorisations will be reviewed during the due diligence process.

Procurement

The promoter has been assessed by the EIB as being a private company not subject to EU rules on public procurement or concessions. However, if at the project appraisal, the EIB were to conclude that the promoter is subject to the EU public procurement legislation then the European Commission will be duly informed and would require the promoter to apply those rules.

Status

Signed - 21/03/2024