Northvolt gains huge subsidy to build its gigafactory in Germany

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Swedish lithium-ion battery maker Northvolt locked in European approval for a €902 million ($986 million) subsidy from the German government to build its gigafactory there.

The European Commission gave the new factory the stamp of approval, adding that it will boost the bloc’s clean energy future and help curb its dependency on China, according to a statement.

The EC also had said that without the German subsidy, Northvolt – a battery startup founded by two former Tesla executives – would have built the plant in the US with support from Biden’s US Inflation Reduction Act.

According to Margrethe Vestager, executive vice president in charge of competition policy, the grant 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.” Building the plant in Germany “is an important step for the electrification of transport in Europe, while preserving the level playing field in the Single Market,” she added.

The original plan for the battery factory was announced in March 2022 with construction scheduled to begin in 2025. The project was put on hold later that year, with Northvolt citing high energy prices in Europe.

The Swedish company is planning a battery cell factory in the northern German state of Schleswig-Holstein in a disenfranchised the town of Heidi, close to the border of Denmark. The factory will be located near an abundance of wind power.

The EU Commission states that the plant will go into operation in 2026, reaching full production capacity in 2029. 

Northvolt is also building a plant in Quebec, on the south shore of Montreal, with the Quebec government contributing $2.9 billion and the federal government contributing $4.4 billion.

Photo credit: Northvolt


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