PARIS (Reuters) - Stellantis ( STLA ), the carmaker whose brands include Peugeot, Fiat and Chrysler, announced on Wednesday a partnership with the French state's CEA research organisation to work on a next generation of battery cells for electric vehicles.

WHY IT MATTERS:

Carmakers around the world are exploring battery technologies to reduce the cost of electric vehicles (EVs).

EV demand has grown more slowly than expected due to high borrowing costs, economic uncertainty and consumer preference for gasoline-electric hybrids.

In response, Tesla and other EV brands have cut prices or offered other incentives to lure consumers to showrooms.

Analysts have said the pressure to cut costs in manufacturing and batteries will continue.

KEY QUOTE:

"We know that battery technology is poised for change. While we don't know exactly how it will change, we are committed to be at the forefront of this transformation. Internally, we are working around the clock placing multiple bets and exploring various technologies," Stellantis ( STLA ) Chief Engineering and Technology Officer Ned Curic said.

"At the same time, we are collaborating closely with tech startups, laboratories, universities, and the most prestigious research institutions in the world like CEA. We believe that this collaboration will accelerate the arrival of disruptive battery cell technology, supporting our mission to offer clean, safe and affordable mobility to our customers," he added.

THE NUMBERS:

EV sales globally are expected to rise to 16.6 million vehicles this year, from 13.7 million in 2023, according to the International Energy Agency, with China's growth outpacing other regions.

In June, Stellantis ( STLA ) CEO Carlos Tavares said synergies from the 2021 merger between Fiat-Chrysler and Peugeot maker PSA that created Stellantis ( STLA ) amount to 8.4 billion euros ($9 billion) a year, more than double that initially targeted.

Stellantis ( STLA ) also said it would target the upper range of its 25% to 30% dividend payout policy in 2025 versus the 25% paid in recent years, and would reward shareholders with at least 7.7 billion euros ($8.31 billion) through dividends and buybacks this year.

($1 = 0.9268 euros)