EV battery firm secures £776m subsidy for gigafactory in win for Europe over US
Brussels has approved €902m (£776.8m) in state aid for a Swedish battery electric vehicle company to build a plant in Germany.
It marks the first use of a measure allowing governments to provide more funding to company’s tempted by higher subsidies elsewhere.
Benefits from Biden’s $783bn (£615bn) Inflation Reduction Act had threatened to lure Northvolt, which has plans to build a plant in Heide, Schleswig-Holstein, across the pond.
But a committment from the German federal government in May to back the project via the EU’s new state-aid regime, the temporary crisis framework (TCTF), kept the battery maker on European soil.
The European Commission’s competition chief Margrethe Vestager, said today the aid will “enable Northvolt’s investment in a gigafactory to produce battery cells for electric vehicles in Europe instead of the United States.”
She added: “It is the first individual measure that was approved in line with the exceptional possibility under the Temporary Crisis and Transition Framework. It allows for providing higher amounts of aid if the investment is at risk of being diverted from Europe due to the availability of foreign subsidies.”
Germany’s Economy Minister Robert Habeck said he was “very, very pleased that this is happening today.”
The country could now “look forward to one of the most significant flagship projects of the energy and transport revolution, which will create thousands of green tech jobs,” he said.
It comes amid a hastening scramble from European countries to build up home supply of materials used to produce electric cars and their batteries.
China is currently far ahead of its competition and its automakers have benefitted, surging to the West while offering cut throat prices for with cut throat prices.
There are fears the influx of Chinese brands could unseat the biggest Western automakers. BYD last week ousted Elon Musk’s Tesla as the world’s top electric vehicle maker for the first time.