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Sun. Apr 21st, 2024

The European Union granted approval on Monday for a 900-million-euro state subsidy from Germany to support the establishment of an electric vehicle battery plant by Northvolt.

This subsidy, equivalent to $985 million, is the inaugural approval under a system implemented last year to counteract the substantial subsidies offered by the United States through the Inflation Reduction Act. EU competition chief Margrethe Vestager emphasized that the aid from Germany matches what Northvolt might have received under the Inflation Reduction Act in the US.

Vestager explained that without state aid in the European Union, Northvolt’s investment could have been diverted across the Atlantic. She acknowledged the strategic choice to enable a member state to match aid, facilitating the investment’s occurrence within the EU. Germany’s Deputy Chancellor Robert Habeck addressed concerns about economic imbalances within the EU, emphasizing that the main competition lies between Europe and other global powers, rather than among EU member states. Habeck highlighted the importance of investments in green technologies for economic security, countering potential dependencies on other major players such as China or the US.

The EU has been actively working to prevent investments in crucial green technologies from relocating to the United States, where the Inflation Reduction Act channels substantial subsidies, including tax breaks for US-manufactured electric vehicles and batteries. Last year, the EU adopted measures allowing member states to match subsidies offered by other countries to retain firms engaged in green technologies within Europe. The approved project involves the construction of a factory in Germany’s northern Schleswig-Holstein region, marking Northvolt’s first plant outside Sweden. The initiative aims to achieve a production capacity for batteries sufficient for approximately one million electric vehicles annually, with full operational capacity anticipated by 2029.

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