French unveil battery plans to plug electric car vacuum

10/3/2009 12:19 PM EDT

The French investment will range from industrial research, battery production, clean car developments as well as building a nation-wide network of battery-charging stations.

There are 30 million cars on French roads at present and only thousands are represented by electric or hybrid vehicles. The French energy ministry estimates that electric cars could represent 16 percent of new cars by 2020, and 27 percent by 2025.

Of the total 1.5 billion euros earmarked, 900 million euros could come from a state loan due to be launched in 2010. The money will be used mostly to build infrastructure but also to buy cars and to support subsidies for both makers and buyers of clean vehicles.

A key part of the plan will see a million battery-charging points being built by 2015, 90 percent of them in private homes but also in car parks and at roadside sites.

From 2012 all new apartment blocks with parking lots will have to include charging stations, and the network will grow to a total of four million points by 2020, the equivalent of two per vehicle.

The French state is also looking to help build up the battery production sector by contributing 125 million euros from its strategic investment fund to the overall cost of 625 million euros for a Renault battery plant at Flins, near Paris.

The state also plans to give Renault a loan of up to 150 million euros to build an electric car factory in Flins.

One hundred million euros will also be made available for other electric carmakers such as Peugeot or Daimler's Smart division.

The French investment highlights that the electric car market is finally beginning to hot up in Europe. In July Nissan Motor Co., announced that it planned to invest almost $700 million to build two plants in the U.K. and Portugal to produce lithium-ion batteries for electric cars.

The U.K. factory based in Sunderland, northeast England will have an annual production capacity of 60,000 units and is expected to create as many as 350 jobs.

Nissan, which is 44 percent owned by French carmaker Renault SA, says it is planning to invest $330 million over the next five years in the U.K. site and $356 million in Portugal.

The world's biggest car maker by sales volume, Toyota, has already announced it will manufacture a hybrid version of the Auris subcompact hatchback in the U.K. from the middle of 2010. Initially Toyota plans to ship the batteries and motors from Japan to be assembled in Europe but the new French investment may well mean that the Japanese vehicle maker may need to re-consider its European manufacturing strategy sooner rather than later.