For a long time, it seemed unclear whether the billion-dollar battery cell factory of the Swedish manufacturer Northvolt would really be built in northern Germany. Due to high subsidies for such plants in North America and the expensive electricity in Germany, Northvolt considered investing on the other side of the Atlantic – and putting the factory plans in Heide in Schleswig-Holstein on the back burner.

Marcus Theurer

Editor in the economy of the Frankfurter Allgemeine Sonntagszeitung.

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But now a turnaround is emerging: Northvolt can now imagine building two factories in parallel because of the great demand for battery cells for the automotive industry: one in North America and one in Heide, according to informed circles. This is now "a clear possibility," said a company spokesman. The plant in Heide is to supply electricity storage for VW and BMW.

Northvolt had announced the construction of the 4.5 billion euro battery cell factory in Schleswig-Holstein in March 2022. The plant was scheduled to go into operation in 2025, it was said at the time. The region is hoping for 3000,<> new jobs. The plant is expected to supply battery cells for around one million electric vehicles per year.

The world market leader comes from China

But in October, in an interview with the F.A.S., company boss Peter Carlsson put a question mark behind the billion-dollar investment: "We are now at a point where we may initially give priority to expansion in the USA over Europe," said the Swede.

In addition to the high subsidies in North America promised by Joe Biden's Inflation Reduction Act, he cited the high energy prices in Germany as the reason: "With the current electricity prices, we see the profitability of energy-intensive projects in Germany at risk," warned the Northvolt boss.

According to reports, Northvolt can now also count on more government support in Germany. In recent months, there have been intensive talks involving not only the Federal Ministry of Economics in Berlin but also the Federal Chancellery. The state of Schleswig-Holstein is also very interested in the major investment. However, any subsidies from the German state would also have to be approved by the EU Commission.

Meanwhile, a site in Quebec, Canada, is considered a candidate for the construction of a Northvolt plant in North America. This was recently reported by the American media. VW has also announced the construction of a battery cell factory in Canada. Because of a free trade agreement, companies there can also benefit from US subsidies.

Northvolt is regarded as a leading company in the race to catch up with European industry in strategically important battery cell production. So far, however, European car manufacturers have been almost completely dependent on suppliers from Asia.

The clear world market leader is the Chinese company CATL. Northvolt was founded in 2017, and investors include VW and BMW. At the end of 2020, the company opened the first battery cell factory of a European company in northern Sweden.