Northvolt could abandon its project for a giant battery factory in Germany

Swedish electric battery group Northvolt may postpone its project for a giant battery factory in Germany due to the energy crisis and more favorable subsidies in the United States, its boss said on Saturday, October 29.

Electricity prices are too high

This emblematic project “could be postponed”, said Peter Carlsson, in an interview with the German newspaper Frankfurter Allgemeine Zeitung.

Northvolt had announced with great fanfare in March the construction in Heide, in northern Germany, of a battery factory capable of supplying a million electric vehicles a year.

This highly energy-intensive giant, consuming 2 terawatt hours per year, was due to open in 2025.

But “at current electricity prices, we see the profitability of energy-intensive projects in Germany threatened,” said Peter Carlsson.

Germany, which was supplied with 55% of Russian gas before the war in Ukraine, must obtain supplies elsewhere, at much higher prices.

These tensions have exploded the price of gas and electricity, raising inflation and production costs in industry, the engine of German growth.

“Priority to expansion in the United States over Europe”

At the same time, a system of advantageous subsidies adopted this summer in the United States weighs down European competitiveness, according to Northvolt.

“We are maintenant at a point or our pouvons donner the priority to the expansion aux États-Unis par rapport à l’Europe” detailed Peter Carlsson, who estimates that the production rate of batteries will decrease from “30 to 40% ” In the U.S.

Washington has adopted language that provides tax incentives for automakers if vehicle batteries are manufactured and assembled in the United States.

This new public aid regime has caused tensions between the United States and the Europeans, with the EU pointing the finger at measures considered protectionist.

“The United States can thus become the most interesting place in the world for the manufacture of battery cells,” added the CEO, and called on the European Union to “counteract US financial incentives.”

In September, the Wall Street Journal reported that US-based Tesla was hesitant, for the same reasons, about its project for a mega-battery factory near Berlin. Information denied by local authorities since then.

The place of production of batteries, where most of the added value of electric cars resides, is a strategic issue for Germany and its emblematic automobile industry, in full transition.