UK Markets closed

Northvolt says 'believes in Germany', battery plant talks ongoing

By Victoria Waldersee

BERLIN (Reuters) - Northvolt believes in Germany as an industrial location and continues discussions on building a battery plant there, it said on Wednesday amid speculation that the Swedish battery maker could divert its planned investment to the United States.

The $369-billion U.S. Inflation Reduction Act passed last year prompted companies including Northvolt to pause for thought on planned investments in Europe, lured across the Atlantic by hefty subsidies and cheaper energy.

"We believe in the location. There are certain requirements in order to make this feasible in competition with the United States," Nicolas Steinbacher, Head of Strategy and Program for Northvolt in Germany, said at a battery conference in Berlin.

"We are working together with the government in a spirit of trust to solve these challenges," he added.

The company is holding fortnightly citizen consultations in Heide in northern Germany, where it signed a memorandum of understanding with the state of Schleswig-Holstein in 2022 for a possible battery plant.

Northvolt's shareholders include Volkswagen and Goldman Sachs.

Chief Executive Peter Carlsson said last October that Northvolt might delay the plant, which had been slated to begin production in late 2025, and prioritise expansion in the United States, citing the sharp rise in energy prices in Europe.

"With current electricity prices it just won't work," Steinbacher said on Wednesday, echoing the CEO's comments.

"We are in good talks with local authorities and the federal government on how to get the Heide project on the road so that the prospect of European cell production does not collapse because of high electricity prices," he said.

The European Union responded on Tuesday to Washington's programme with its own plans to make life easier for green industry, saying it would mobilize state aid and a sovereignty fund to keep firms in the region - but the proposed fund does not yet have the support of all EU governments, notably Germany.

(Reporting by Victoria Waldersee; Editing by Christoph Steitz and Tomasz Janowski)