The German government will support the financing of Northvolt’s battery cell factory in Sweden with a state guarantee of 443 million euros as part of the federal foreign trade promotion programme.
The support was awarded given that carmakers from the German automotive industry are involved with Northvolt. The battery cell factory is considered an important building block in the creation of a broad and stable value chain for electric vehicles in Germany and Europe.
From Germany, car making giants Volkswagen and BMW are engaged with strategic cooperations with Northvolt for joint research and development at the Swedish plant. The cooperation will also enable the two companies to secure the long-term supply of battery cells.
BMW signed a supply contract with Northvolt in July, supplementing existing contracts with Samsung SDI and CATL. From 2024 onwards, the Swedish company should be supplying the German carmaker with cells worth two billion euros.
The Northvolt production plant in Sweden also serves as a reference and pilot project for the Northvolt Zwei (German for two) production facility Salzgitter in Germany. The German plant is a joint venture between Northvolt and Volkswagen and will begin operation from 2024. The Volkswagen-Northvolt plant was announced back in June 2019, when both companies said that the battery cell production at the plant would be set up from 2020 and start at the turn of the year 2023/24. The target for the first year is a capacity of 16 GWh, after which Volkswagen and Northvolt are aiming to expand this to 24 GWh.
The guarantee from the German Federal Government is granted under the government’s foreign trade and investment promotion scheme. These are called UFK guarantees and can be used to support projects abroad in which there is a special government interest – in this case because of their importance for the German automotive and electromobility sector. As part of the overall financing, the UFK guarantee covers a loan of 525 million dollars granted by banks against the default of political and economic risks up to an amount of 80 per cent.
In addition to the financing from Germany, funds gathered so far have also come from France, Japan, Korea and the European Investment Bank. Just last month Northvolt took out further loans totalling 1.6 billion dollars from a number of banks to finance upcoming battery cell factories. In total, Northvolt has thus secured over 3 billion US dollars.
The annual production capacity of the Swedish battery cell plant is to start in 2021 with 32 GWh capacity and fully expanded in 2024 with 40 GWh.
bmwi.de (in German)