The German Government Finances the Construction of the Northvolt Gigafactory in Sweden

The German government has announced that it will financially support the construction of the Northvolt battery factory in Sweden through a state guarantee that will cover up to 80% of a 443 million euro loan granted by German banks against defaults caused by political and economic risks. This state guarantee has been given under a foreign trade and investment promotion scheme that allows Germany to support international projects of “special interest to the government.”

This endorsement of Northvolt by Germany is because several German car manufacturers are involved in this project. The Swedish battery gigafactory is also seen as a critical part of the European Union’s plans to achieve a powerful battery industry capable of competing against Asian dominance in the sector.

Both Volkswagen and BMW are part of the list of strategic partnerships that Northvolt has established with various companies to further research and develop battery technology. This collaboration will also allow two German manufacturers to ensure the long-term supply of cells.

The alliance with BMW was signed in July and will complement the German brand’s contracts with the Korean Samsung SDI and the Chinese CATL. Thus, starting in 2024, the Swedish company should start supplying cells to its partner through a deal valued at around 2 billion euros.

On the other hand, the Swedish gigafactory will be the prelude to constructing a second plant in Germany, which will belong to a joint venture between Northvolt and Volkswagen. This factory will begin operating in 2024 with an annual capacity of 16 GWh, although eventually, both companies will expand it to 24 GWh.

In addition to German funding, Northvolt has also received funding from France, Japan, South Korea, and the European Investment Bank. So far, Northvolt has secured investments worth $3 billion, which will allow it to start operating its Swedish gigafactory by 2021. This plant will have an initial capacity of 32 GWh per year, reaching 40 GWh in 2024.

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