Stellantis-Mercedes Joint Venture Nears Huge $4.7 Billion Debt Deal For EV Expansion: Report

Stellantis NV STLA and Mercedes-Benz Group AG are reportedly on the brink of securing a €4.4 billion ($4.7 billion) debt deal for their electric-car battery venture in Europe.

What Happened: Bloomberg reported on Thursday that the Automotive Cells Company SE (ACC), a joint venture between Stellantis and Mercedes-Benz, is in advanced discussions with banks to finalize the debt agreement. The funds will be used to expand ACC’s French factory and establish new sites in Germany and Italy.

A consortium of commercial banks and state-owned lenders is likely to support the debt package. This move is crucial for Europe’s ambitions to develop a local electric vehicle supply chain to compete with Asia.

ACC is also planning to increase its initial €7 billion investment by modifying the shareholdings of its third backer, TotalEnergies SE’s Saft. Stellantis and Mercedes are expected to raise their equity stakes in ACC.

See Also: Long-Time Tesla Investor Says Elon Musk’s Alleged Drug Use, Party Culture Could Be Distracting Investors

Why It Matters: This development is significant in the context of the European Union’s push for a sustainable and competitive electric vehicle industry. The EU has been striving to reduce its reliance on Asian battery suppliers, and the success of ACC’s expansion plans could be a significant step in this direction.

Stellantis has been under scrutiny in Italy for its decision to shift production to countries with lower costs. This debt deal could potentially alleviate some of the pressure it has been facing from the Italian government.

Mercedes-Benz, on the other hand, has been navigating challenges in the EV market, as seen in its stock tumble after a warning of a “brutal” EV market during its third-quarter earnings call in October.

Read Next: Tesla Investors Pledge Support For Elon Musk, His 25% Ownership Goal: Shareholder Letter Calls For Tesla

Photo by Jonathan Weiss on Shutterstock