Northvolt AB is planning to move forward with two major new battery plants in Germany and North America as vying subsidies spur green-tech investment.
(Bloomberg) — Northvolt AB is planning to move forward with two major new battery plants in Germany and North America as vying subsidies spur green-tech investment.
The decision marks a victory for Germany, where the Swedish battery maker’s plan to for a site in the northern German town of Heide had been put on hold as incentives in the US became clearer.
Germany funding “will unleash a billion-dollar private investment that will create 3,000 direct jobs in Heide and thousands more in the surrounding industry and service sector,” the government said Friday in a statement.
Northvolt had been looking at starting with just one plant but now aims to build the two factories simultaneously, according to a person familiar with the matter, who discussed the private information on condition of anonymity.
The move illustrates how aggressive subsidies and tax credits in the US and Europe are spurring investment in green technology. With Chinese battery makers pouring billions of euros into new European facilities, Northvolt’s decision delivers a needed boost to the continent’s ambitions to compete in the rapidly growing industry around electric vehicles.
Northvolt, which counts Volkswagen AG and BMW AG among its customers, previously warned it might postpone the German plant in favor of investment in North America because of rich incentives on offer. Building two factories at the same time is a “distinct possibility,” according to a spokesman.
The company first announced the multi-billion euro plant in Germany’s Heide over a year ago with a target of starting production in late 2025 with an eventual annual capacity of 60 gigawatt-hours, enough to power roughly 1 million electric vehicles. That timeline was at risk of being pushed out due to the attraction of US President Joe Biden’s green tech incentives as part of the Inflation Reduction Act.
The tax credits are set to cover about 30% of cell manufacturers’ operating costs, Northvolt calculated. Europe’s most advanced home-grown battery play, Northvolt last year started shipments from its cell plant in northern Sweden.
The European Union, alongside national incentives, is stepping up efforts to level the playing field with the US on attracting future technologies promising to reduce CO2 emissions. The bloc already offers generous support, but getting access to funds is an overly cumbersome process, industry players say.
Meanwhile, Asian firms have been setting up factories across the continent. Taiwanese battery maker ProLogium Technology Co. said this week it aims to start mass production of a new generation of cells in France as part of its project to invest as much as €5.2 billion ($5.7 billion) in the country.
Contemporary Amperex Technology Co. Ltd, the world’s biggest cell manufacturer, this year started output at its first European plant in eastern Germany and it’s adding a €7.3 billion facility in Hungary with Mercedes-Benz AG and Volkswagen AG among its customers. Chinese-owned Envision AESC plans to build battery plants in Spain and France, and EVE Energy Co., BMW’s second supplier for cells produced in Europe, has bought land in Hungary.
Chinese battery maker SVolt Energy Technology Co. is set to expand its footprint in Europe to as many as five factories, with talks to supply the region’s carmakers well underway.
(Updates with German statement in third paragraph.)
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