The European Commission has approved a 902-million-euro state aid measure by the German government in support of Swedish battery manufacturer Northvolt. The company will use the aid to build a production plant for electric vehicle batteries in Heide, Germany. Prior to the EU approval, the German government had already approved the aid in early December 2023.
First aid to prevent investment from leaving Europe
The German aid consists of a direct 700-million-euro grant and a guarantee of 202 million euros. Of the 700 million euros, approximately 564 million euros will come from the federal government and 136 million euros from the state of Schleswig-Holstein. Without the aid, the plant would have probably been built in the United States where a subsidy was offered as part of the Inflation Reduction Act (IRA). This marks the first individual aid approved under the Temporary Crisis and Transitional Framework which has been in place since March 2023 to prevent investment from leaving Europe.
Production to start 2026 and to peak in 2029
Production at the German Northvolt plant is scheduled to start in 2026. Full production capacity of 60 gigawatt-hours is expected to be reached by 2029.