German government to fund Northvolt’s EV battery project

16 May 2022


Swedish battery maker Northvolt will receive €155.4 million in funding from the German government. This investment will help the company set up a large electric-vehicle (EV) battery-cell production facility in the country.

The funds are part of the Important Projects of Common European Interest (IPCEI) project, with the state of Schleswig-Holstein providing 30% of the money and the rest coming from Germany’s federal budget. Northvolt has received official notice of the investment from Robert Habeck, federal minister for economic affairs and climate action.

Northvolt intends to build an EV battery gigafactory in northern Germany, which could have an annual production capacity of 60GWh. That is enough output to power one million vehicles. The site is known as Northvolt Drei and will allow the company to deliver sustainably-produced lithium-ion batteries to the European market

EV battery hub

The German government is supporting the Volkswagen (VW)-backed startup as the country shifts its focus to electromobility and renewable energy. The investment shows that Germany is keen to become a hub for the European EV battery industry.

By the end of the decade, the government plans to spend more than €15 billion on battery-cell plants. More investments will be channelled into raw materials, battery materials and components, as well as recycling.

‘I am very pleased that Northvolt is considering Schleswig-Holstein for a large, sustainable battery-cell factory. Locally generated renewable energy will power the manufacturing,’ said Habeck.

‘This shows [that] Germany is an attractive location for future industries and the renewables are now a tangible economic factor. Wherever wind and sun are turned into electricity, there are also good conditions for energy-intensive companies. Northvolt’s investment will give electric mobility in Germany a further boost, make us less dependent on imports and create around 3,000 jobs locally,’ he added.

The German government is backing the development of an EV-battery ecosystem by providing funding, networking opportunities and coordination on a European level. EV batteries ‘made in Germany’ hold appeal, going hand in hand with the country’s plans to electrify mobility. It also helps to reduce the length of the supply-chain and improve the sustainability of EVs, bringing battery-cell production closer to vehicle manufacturing plants.

EV battery-cell production

Northvolt’s factory for EV batteries will be one of the largest battery-cell production facilities in Germany, and with the funding, the project has now come one step closer to realisation. Northvolt first announced plans to build a German gigafactory in March.

The startup wants to develop the site in the state of Schleswig-Holstein because of the area’s clean-energy grid, generated by onshore and offshore wind power. A final decision on the exact location will be made in July 2022. Operations are expected to begin in 2025.

Since launching in 2016, Northvolt has secured $50 billion (€46 billion) worth of contracts from key automotive players, including BMW, Scania, VW, Volvo Cars, and Polestar. VW is a key investor, as well as partner, with the carmaker selecting Northvolt as a strategic lead supplier of premium EV battery cells made in Europe.

Northvolt recently announced it would build a lithium conversion plant in Portugal, with the project helping to develop a battery value-chain in Europe. The company expects €700 million will be invested in the site that will start commercial activities in 2026.