Sweden’s Northvolt will invest several billion euros to build a gigafactory in Germany, able to supply around 1 million electric vehicles with battery cells every year, the lithium-ion battery maker and German government said in a joint statement on Friday.
The federal government as well as the Schleswig-Holstein state government will provide subsidies for the project in Heide, northern Germany, subject to approval by the European Commission, the statement said.
If approved, the subsidies would be the first granted by Germany under the European Union‘s Temporary Crisis and Transition Framework, developed to support green industrial projects as Europe scrambled to provide a competitive offer to U.S. subsidies provided by the Inflation Reduction Act.
The investment will create 3,000 direct jobs in Heide and thousands more in the surrounding industry and service sector.
Northvolt and the state of Schleswig-Holstein signed a memorandum of understanding in March 2022 to develop a battery plant in the region but the company later said it may prioritise expansion in the U.S. ahead of Europe in light of more favourable subsidies and lower energy costs.
A spokesperson said on Friday that setting up two plants concurrently was an option but nothing had been decided.
Construction could begin later this year and deliveries of Heide-made battery cells could begin in 2026, the company said. Local councils this week approved the draft development plan for the plant, clearing a major administrative hurdle.
The Swedish battery maker is the furthest ahead among just a handful of European players paving the way for a home-grown battery industry, with a large chunk of planned capacity in Europe to be owned by Asian players.
Taiwan’s ProLogium said on Thursday it had picked France as the location of its first overseas car battery plant.
To fund its projects, Northvolt is also preparing an initial public offering that could value the company at more than $20 billion, sources have previously told Reuters.
