Automotive Cells Company (ACC) – the battery cell joint venture between Stellantis, Mercedes-Benz and Saft – is revising technology plans for its second gigafactory project, based in Germany.

In a statement to Kallanish, ACC said it is adapting its battery supply strategy to add new low-cost cell chemistries to its portfolio “responding to a shift in market demand towards lower cost vehicles.”

The project in Kaiserlautern, Saarland, was planned to start an initial capacity of 13.4 gigawatt-hours in 2025. The intention was to eventually increase production capacity to 40 GWh of lithium-ion cells. The factory had received €437 million in federal and state subsidies.

Yet, with lower EV demand, reducing the upfront cost of the vehicles is crucial for carmakers to increase sales and expand the uptake of EVs. Making batteries using lithium iron phosphate (LFP) cells seems to be an obvious move for carmakers. In China, LFP batteries already account for the majority of EV deployment, and this trend is expanding into European and North American markets.

“⁠These technological developments call for a new phase of R&D over the coming months to be able to industrialise more affordable products,” ACC explains.

Chief executive Yann Vincent indicated the company intends to confirm its industrial and construction timeline at the end of 2024-beginning of 2025, following an evaluation process with its shareholders. All work on the project has been halted until a decision is made.

Meanwhile, ACC is ramping up production at its first gigafactory located in Billy-Berclau/Douvrin, France. A third gigafactory is planned in Termoli, Italy, though the project’s timeline is likely to be postponed.

Last year, Stellantis, which is ACC’s largest shareholder with a 45% stake, agreed to build an LFP battery production plant in Europe with Chinese giant CATL. On Tuesday, when questioned on whether the company would still support ACC factories in addition to the CATL joint venture, Stellantis ceo Carlos Tavares said: “We are going to adjust our investment plans on EVs to the pace at which market sales of EVs grow… We do not control that speed.”

It remains unclear whether Stellantis will maintain its investment in ACC, but the France-based battery JV emphasises it is already “one of the key players in the European battery industry.” That is thanks to its ongoing projects, an R&D centre in Bruges and a pilot plant in Nersac.

With an original €7 billion ($7.16 billion) estimated budget, ACC had ambitions to reach 120 GWh of production capacity in 2030 with three gigafactories. That’s estimated to be 2 million batteries per year.