Mercedes-Benz Group AG (OTC:MBGYY) and Stellantis NV (NYSE:STLA) are in talks with the Serbian government to invest in lithium-processing and electric vehicle (EV) battery production.

Both companies' involvement would focus on developing EV battery output and processing facilities.

The car companies, already partners in a battery joint venture, aim to build on the line of Rio Tinto Plc's (NYSE:RIO) $2.4 billion investment in a Serbian mine.

These discussions mark progress in reviving the project that Serbia halted two years ago after local protests, reported Bloomberg.

The Serbian government has emphasized the need for a comprehensive lithium industry rather than merely exporting raw materials.

As the European Union depends entirely on imports for battery production, it is keen on developing its own EV supply chain to reduce reliance on Asia.

Despite potential advancements in European battery production, the industry remains heavily dependent on China's raw materials and processing capabilities.

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An overall slowdown in EV adoption has delayed several battery manufacturing projects. Both Mercedes and Stellantis have paused two out of three planned battery plants in Europe, originally budgeted at €7 billion ($7.7 billion), due to lower-than-expected vehicle demand.

Serbia's President Aleksandar Vucic announced that Serbia will sign a framework agreement with the European Union on mineral raw materials.

The agreement aims to establish a processing industry and battery production in Serbia, ensuring that produced materials and EVs qualify for sale in the EU without additional taxes.

Management from both the automakers may sign letters of intent to further develop Serbia's lithium industry, boosting the country's economic growth and technological advancements.

Price Action: STLA shares are trading higher by 3.20% at $20.99 in premarket at last check Thursday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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