Northvolt secures €902M to build Ev battery plant in Germany

Swedish battery producer Northvolt recently secured a €902 million German state aid package to build an electric vehicle battery plant in Germany, following a green light from the European Union. The decision came amid Europe’s competition with the US and China in the green technology sector.

Northvolt’s German battery plant will be built in the city of Heide, in the country’s northernmost state of Schleswig-Holstein, and will have an annual capacity of 60 GWh. This figure translates to providing batteries for 800,000 to one million electric vehicles per year.

According to a European Commission press release, the plant is set to start production in 2026 and enter full production capacity in 2029. The state aid deal was the first one made under the commission’s Temporary Crisis and Transition Framework, an agreement adopted by EU member states in March last year.

The framework allows EU countries to grant aid to companies that foster support for transitioning to a net-zero economy and cushion the impacts of high energy prices due to the ongoing Russia-Ukraine war. Additionally, the framework aims to incentivise companies to seek investments in the EU rather than other countries.

The EU’s nod for Northvolt’s state aid was made after the company had hinted at backing out of its plan to build the German plant. Northvolt had indicated that it would instead pivot to the United States and make use of subsidies under the Biden administration’s Inflation Reduction Act.

“This €902 million German measure is the first individual aid being approved to prevent an investment from being diverted away from Europe, under the new possibility offered by the Temporary Crisis and Transition Framework since March 2023,” said Margrethe Vestager, the European Commission’s executive vice-president and commissioner for competition.

This development aligns with the EU’s commitment to achieving its green energy goals as part of the European Green Deal, reducing dependence on other countries for essential raw materials and technologies.

“This is an important step for the electrification of transport in Europe, while preserving the level playing field in the Single Market,” Vestager said.

With Northvolt’s decision to establish a plant in Germany, the European battery industry will gain a strategic advantage in the global market, while also addressing concerns about supply chain security and economic self-sufficiency.