Transportation Innovation

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>>> A Big Oil Company Is Jumping Into EV Batteries


Barron's

By Al Root

Sept. 24, 2021


https://www.barrons.com/articles/totalenergies-big-oil-company-ev-batteries-51632487450?siteid=yhoof2


Less than 10 million of the roughly 600 million cars, trucks, motorcycles, and buses on roads in the U.S. and Europe are electric. Nonetheless, a big oil company might already be feeling the threat.

French energy giant TotalEnergies (ticker: TTE.France) has entered into an agreement with Chrysler owner Stellantis (STLA) and Daimler (DAI.Germany) luxury division Mercedes Friday in a pact to make EV batteries.

The trio will each own a third of the joint venture, called Automotive Cell Company, which plans to produce at least 120-gigawatt hours of batteries annually by 2030. That’s roughly enough to provide power for 2 million EVs a year.

“This new step is another demonstration of TotalEnergies transformation into a broad energy company and of our willingness to extend our footprint in electric mobility,” said Patrick Pouyanné, TotalEnergies’ Chairman and CEO, in the announcement.

TotalEnergies changed its name from Total in June. The name change was a sign that the $123 billion market capitalization company is thinking about the transition away from a fossil-fuel-powered economy. Friday’s announcement is the equivalent of Exxon Mobil (XOM) pouring billions in to EV battery production.

For Mercedes and Stellantis, the announcement is another in a long line of battery announcements. General Motors (GM) and LG Chem (051910.Korea) expanded their plans to build EV battery capacity earlier this year. Ford Motor (F) and SK Innovation (096770.Korea) announced plans for battery capacity in May. And Volkswagen (VOW.Germany), Toyota Motor (TM) and, of course, Tesla (TSLA), along with other auto makers, all have their own plans to build battery capacity.

Roughly tens of billions of dollars is being spent by the industry between now and 2030 to produce enough batteries to make tens of millions of EVs a year.

The plan for 120-gigawatt hours contemplated by Stellantis, Mercedes, and TotalEnergies should end up costing between $8 and $9 billion.

“This investment marks a strategic milestone on our path to CO2 neutrality,” said Daimler CEO Ola Kallenius. CO2 neutrality refers to operations and sales that add no additional carbon dioxide to the atmosphere. Neutrality is difficult for a car company because its products are powered by burning an oil product.

“Stellantis’ electrification strategy is running full-speed ahead, and today’s announcement is the next step in our plan to be the automotive frontrunner, with all 14 brands committed to offering best-in-class fully electrified solutions that meet demands of customers,” said Stellantis CEO Carlos Tavares.

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