Northvolt to build gigafactory in Germany after state aid pledge

Northvolt to build gigafactory in Germany after state aid pledge

Northvolt, Europe's biggest battery maker, has confirmed that it will build its next gigafactory in Heide, Germany, following the federal government's pledge to provide state aid.

The announcement comes after several months of uncertainty. In March 2022, the Swedish manufacturer and the German state of Schleswig-Holstein signed a memorandum of understanding to construct a factory in the region. But in October 2022, Northvolt said it might postpone the plan and priotirise a US expansion instead -- unless the EU was willing to match the IRA's loftier subsidies for green technologies.

In response, the German government has now confirmed it'll fund the gigafactory under the Temporary Crisis and Transition Framework (TCTF) -- a new EU state-aid plan, designed to support the development of green projects in view of the US' respective subsidies and Russia's energy monopoly.

The funding needs to be approved by Brussels first, but the federal government said it's already "in the first constructive discussions" with the European Commission.

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"Backed by this commitment of the federal government, Northvolt has decided to take the next steps towards our expansion in Heide," said Peter Carlsson, founder & CEO of the company.

The gigafactory will have a 60GWh annual production volume of battery cells, aiming to supply approximately 1million EVs. It's expected to unlock a multi-billion euro private investment, and create 3,000 direct jobs with thousands more estimated in the surrounding industry and service sector.

"With the next steps regarding Northvolt, Germany can look forward to one of the most significant lighthouse projects of the energy and transport transition," said Robert Habeck, Germany's deputy chancellor and economy minister.

In addition to the Commission's approval, the gigafactory still requires preparational on-site work for construction and the final building permission. Deliveries of the first battery cells are expected in 2026.