State aid: Commission approves €24.2 million of aid to Valeo for the development of a new hybridisation system for petrol-engined vehicles
European Commission - IP/13/703 17/07/2013
Brussels, 17 July 2013
The European Commission has decided that the aid granted by France to the car component manufacturer Valeo to conduct the “Essencyele” research and development programme complies with the EU rules on state aid. The aim of this project is to develop an intermediate (or “mild”) hybrid system for petrol-engined vehicles capable of constituting a compromise between the existing “micro” hybrid technology (with a low‑cost start‑stop system, which generates limited CO2 emission gains) and expensive “full” hybrid solutions (with an electric drive mode, generating substantial emissions gains). The aid addresses a genuine market failure without giving rise to an undue distortion of competition.
Valeo will receive €24.2 million in state aid: €8.3 million in grants, €5.3 million in repayable advances for industrial research and €10.6 million in repayable advances for experimental development.
The Commission examined the compatibility of the aid in relation to its Guidelines for state aid for research and development and innovation (R&D&I guidelines, see IP/06/1600 and MEMO/06/441).
Following its appraisal, the Commission concluded that the Essencyele project suffered from market failures (in view, inter alia, of information asymmetry and problems of coordination between R&D partners), and that the aid was both necessary and sufficient to spur Valeo to carry out an R&D project that it would not otherwise have launched of its own volition: if aid had not been provided, Valeo would have focused its R&D on specific requests from customers and made incremental improvements to its systems. In addition, given the proliferation of technology in this field, Valeo’s limited market shares on completion of the project, and the significant countervailing power of vehicle producers, the Commission was able to rule out the risk of any excessive distortion of competition.
On completing the Essencyele project, Valeo will market an electric motor with integrated electronics (the “i-Motor”) and four new components for combustion engines: an engine control unit (ECU), an exhaust gas recirculation (EGR) system, an electrified turbocharger turbine wastegate actuator (turbo e-actuator) and an electrified cylinder deactivation system (e-DoD).
Valeo will carry out the Essencyele project in partnership with four other undertakings (Hutchinson, GKN, PSA Peugeot-Citroën and the SME EFS) and seven research organisations (IFPEN, CORIA, L2EP, LAPLACE, TEMPO, SATIE and LEC). For those partners which benefit from state aid, the grants for the Essencyele project are compatible with a French R&D aid scheme (case SA 32466) which complies with the criteria of a regulation exempting certain categories of aid from prior authorisation by the Commission (see IP/08/1110 and MEMO/08/482).
In its appraisal of the case, the Commission took account of the innovative approach envisaged by the partners, which is exceptional in that it was conceived by a car component manufacturer, whereas traditionally innovation in the sector is driven by vehicle producers. Component manufacturers sometimes act in partnership on such projects as sub‑contractors, but generally they are limited to the development of individual components, while control of the overall development process remains with the vehicle producers (producing to their own technical specifications). Innovation is only usually spread within the sector after costly adaptations and time lags which depend on the length of the vehicle producer’s period of exclusivity. With a component manufacturer leading the project, Esencyele follows a more generic approach, which is a key criterion for rapidly spreading the innovative technological solutions throughout the sector as a whole.
The non-confidential version of today's decision will be made available under case number SA 34666 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the Internet and in the Official Journal are listed in the ‘State aid Weekly e-News’.