Northvolt gains EU nod for $986 million German aid to build EV battery plant

BRUSSELS (Reuters) - Swedish lithium-ion battery producer Northvolt on Monday secured EU approval for 902-million-euro ($986.43 million) in German state aid to build an electric vehicle battery production plant in the north of Germany.

The European Commission said the plant would accelerate the 27-country bloc's green transition and reduce fuel dependencies, and that the German aid was necessary as without it, Northvolt would build the plant in the United States with support from the U.S. Inflation Reduction Act.

The German aid consists of a 700-million-euro direct grant and a 202-million-euro guarantee.

The plant, to be located in the city of Heide, will have an annual capacity of 60 GWh which translates to 800,000 to 1 million electric vehicles per year, depending on the size of the battery.

Production will start in 2026 and will reach full capacity in 2029.

($1 = 0.9144 euros)

(Reporting by Foo Yun Chee)