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09.01.2024 21:12, Gennady Detinich
European Commission provided a subsidy for the first time to a battery manufacturer as part of its anti-leak business in the United States. The recipient was the Swedish company Northvolt, a developer of original lithium batteries with competitive characteristics. Back in March 2022, Northvolt promised to build a battery megafactory in Germany, but later abandoned the promise and set its sights on a plant in the United States.
Render of a future plant in Germany. Image source: Northvolt
The Inflation Response Act (IRA), signed into law by President Joseph Biden on August 16, 2022, provides generous subsidies to manufacturers who wish to build factories in the United States. This derailed Northvolt’s commitment to operating in Europe, which they publicly announced shortly thereafter. This was undesirable for the EU, and lengthy negotiations began, despite experts warning that US bureaucracy and investment policy would ruin the production of batteries for electric vehicles in Europe.
Today it became known that the European Commission has agreed to give Northvolt an unprecedented subsidy for the construction of the plant. This was the first action in opposition to US financial policy.
Po words Margrethe Vestager, Executive Vice President in charge of Competition Policy, the grant is “the first individual assistance approved to prevent investment flight from Europe under the new opportunity offered by the Temporary Crisis and Transition Framework from March 2023”. “The construction of the plant in Germany is an important step for the electrification of transport in Europe while maintaining a level playing field in the single market,” – she added.
Example of Northvolt products. Image source: Northvolt
For the construction of the plant, Northvolt received €902 million ($986 million) from the European authorities. The plant will be built in the city of Heide, Schleswig-Holstein. Construction will start in 2025 (another greeting from the European bureaucracy) with the start of work in 2026 and reaching full capacity in 2029. At full capacity, the plant will produce batteries for 1 million electric vehicles annually.
And now about the sad thing for Europe. Northvolt has already begun building a plant in North America – in Canada. The Quebec authorities allocated $2.9 billion to the company, and the federal government another $4.4 billion. It seems that we are talking about Canadian dollars, which reduces the amount by about 30% if we talk about US dollars. But still, against this background, Europe does not look like a very rich region of the world with a rather cool investment climate.
2024-01-09 18:12:00
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