The Another

    Northvolt considers abandoning construction of battery factory in Germany to build in the US



    Picture taken on October 19, 2017 shows Northvolt's CEO Peter Carlsson during a press conference in Stockholm.

    A few kilometers from the North Sea coast, standing on the moors of Schleswig-Holstein, Heide is one of those typical villages of Germany’s northernmost state: a rural community, swept by the sea winds, where manufacturing has become rare.

    For several months now, though, Heide has been at the heart of a battle that has become almost existential for “made in Germany”: The Swedish group Northvolt, which was planning to set up a huge car battery factory in Heide, is threatening to build it in the United States instead, mainly because the cost of electricity in Germany is too high.

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    If Heide were to be abandoned, it would be catastrophic for the German industrial site. A year ago, in March 2022, Berlin and the Schleswig-Holstein region celebrated the announcement of Northvolt’s move to the region, which promised an investment of €4.5 billion and the creation of 3,000 jobs.

    The Minister for Economic Affairs and Climate Change, the environmentalist Robert Habeck, was particularly pleased. A native of Schleswig-Holstein, where he was a regional minister, he has played a major role in making the region self-sufficient in green energy by developing an ambitious wind power program. It was the local abundance of renewable electricity that convinced Northvolt to locate in Heide. The vision of environmentalist Habeck was realized: It is possible to combine industry with carbon neutrality.

    Intense negotiations

    Alas! A few months later, Northvolt’s boss, the Swede Peter Carlsson, dashed hopes of a rapid opening of the Heide plant. In the columns of the Frankfurter Allgemeine Zeitung in October, the 52-year-old founder and former Tesla executive explained that the highly anticipated factory project was now facing headwinds. The Inflation Reduction Act (IRA), which massively subsidizes projects for low-carbon technologies produced in the United States, has reshuffled the deck, as has the energy crisis caused by the war in Ukraine.

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    “With current electricity prices, we consider the profitability of energy-intensive projects in Germany to be at risk,” said Carlsson. “We want to continue to be a European champion and market leader. But we are now at a point where it is possible that we will prioritize expansion in the US over Europe.”

    These statements chilled Berlin and triggered a phase of intense negotiations between the Swedish group and the German and European authorities, which is not yet over. But no decision has been taken, the Northvolt group confirmed to The world. It hopes that the matter will be decided “in the course of the year.” In practical terms, it is a question of knowing to what extent the Swedish group can benefit from the European response to the very attractive American subsidies, and above all, within what timeframe. Habeck continues to throw all his weight behind Heide’s investment: He personally visited Northvolt’s research center in Västeras, Sweden, in February 2023. “We continue to work on the Heide project,” Carlsson said after the visit.

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