Brussels approves 902 million in aid from Germany to Northvolt to produce electric car batteries

2024-01-08 16:40:39

The European Commission has approved German state aid of 902 million euros to support the Swedish battery company Northvolt in the construction of a battery production plant for electric vehicles in order to promote the transition to a zero-emissions economy. in line with the Industrial Plan of the European Green Deal.

This is the first aid to benefit from the new Temporary Crisis and Transition Framework for state aid adopted by the Community Executive in March 2023 to counteract the impact on the European economy of the US Inflation Reduction Act (IRA). , endowed with a package of 369,000 million dollars in subsidies to promote ‘green’ investment.

This framework allows state aid to be used to match investment from third countries such as the United States and thus prevent the migration of ‘clean’ technology companies when there is a real risk that investments will be diverted away from European soil until the end of 2025.

“This paves the way for greater European production of batteries,” said the Vice President of the European Commission responsible for Competition, Margrethe Vestager, who highlighted that Germany has been the pioneer country of this process, in a joint press conference with the German Vice Chancellor and Minister of Economy and Climate Action, Robert Habeck.

Germany notified the Commission of a €902 million measure to support Northvolt in the construction of a production plant for advanced, high-efficiency batteries for electric vehicles in the city of Heide.

The plant will have an annual capacity of 60 gigawatt hours (GWh), which translates into between 800,000 and one million electric vehicles per year, depending on the size of the battery. The plant will begin production in 2026 and will reach full production capacity in 2029.

Under the measure, the aid will take the form of a direct subsidy of €700 million and a guarantee of €202 million. Without the aid, Northvolt would establish the plant in the United States, where support is offered in particular under the Inflation Reduction Act.

The Commission concluded that the German measure complies with the conditions set out in the Crisis and Transition Temporary Framework, in particular the section allowing Member States to support accelerated investments in strategic sectors for the transition to a zero-emission economy.