Swedish startup Northvolt, Europe’s best-funded battery manufacturer, has secured approval from the European Commission for €902m in state aid from Germany to build a production plant in the north of the country.
The German state funding package was announced last year but was put in jeopardy in November, after the country announced a budget freeze. Northvolt was then granted an exception, but the deal still awaited approval from the EU.
Northvolt’s German factory, announced last year, will be in Heide, a town near the Danish border. Production is expected to start in 2026 and produce 60 GWh of battery capacity each year, enough to power 600k electric vehicles.
The total price tag for the facility, which is expected to create around 3,000 jobs, has been estimated at approximately €4.5bn.
Northvolt already has one up-and-running factory in Sweden and Poland; alongside the German one, it is also building a factory in Canada.
Today’s approval of the deal is the first time the EU has greenlit funding under a new regulation aimed at increasing the bloc’s competitiveness.
The European Commission said it had greenlit the funding as the plant would help boost the bloc’s climate ambitions and that, without it, Northvolt would head to the US instead.
America’s Inflation Reduction Act (IRA) offers significant incentives for climate tech companies to head stateside. The bill caused a scramble in Brussels as policymakers drew up packages to keep companies in the EU.
Speaking to Sifted last year, Northvolt cofounder Paolo Cerruti said the bill had “been an immense catalyst for us reshuffling our industrial rollout plan”.
Germany is not the only country to ink a deal with Northvolt. In December last year, it secured a $1.5bn credit guarantee from Sweden’s National Debt Office. The guarantee will form part of a larger raise set to be finalised this year, the company said at the time.
Northvolt had a difficult end to 2023, after two workers died in separate accidents at its site in Sweden.