Italian minister gives Stellantis ultimatum over EU funds for planned gigafactory

MILAN (Reuters) -Italy's industry minister said on Thursday he expected "within hours" a firm commitment by Stellantis over its plan to build a battery-making plant in the country, otherwise the government would move public funds for the project elsewhere.

ACC, a battery joint venture in which Stellantis is the largest investor, has plans for three gigafactories in Europe. But earlier this year it said it was putting on hold works on two of them, in Italy and Germany, as the company switches to lower cost batteries amid slowing demand for electric vehicles.

"Stellantis must give us a reply, and it must do so shortly," Minister Adolfo Urso said during a conference in Rimini.

"If Stellantis does not give us a positive feedback within hours, we'll move ... funds elsewhere. We can't afford to lose these funds because Stellantis is not sticking to its commitments."

ACC's plan for an Italian gigafactory, based on the conversion of a Stellantis engine-making plant in Termoli, envisages a total investment of around 2 billion euros ($2.2 billion), including 370 million euros in public money, through the EU's post-COVID recovery fund.

Stellantis said in a note late on Thursday that ACC was currently enhancing the Termoli gigafactory plan, as well as the one for Germany, "to introduce a new technology for the production of cells and modules, to be in line with the evolution of the market".

In the meantime, it had taken decisions aimed at increasing output of components for hybrid engines at the plant, it added.

The Termoli gigafactory was initially expected to start operations in 2026.

ACC, which also has Mercedes and TotalEnergies as shareholders, has said it would confirm its industrial and construction timeline later this year or in early 2025.

Urso, who has repeatedly criticised Stellantis, Italy's sole major automaker, for not producing enough vehicles in the country, said the government would assess how to support the Termoli gigafactory plan with other public funds, should Stellantis confirm its plans at a later stage.

($1 = 0.8980 euros)

(Reporting by Giulio Piovaccari; editing by David Evans, Kirsten Donovan)