Goldman-backed battery firm Northvolt earmarks next quarter for U.S. factory announcement
A Northvolt building in Sweden, photographed in February 2022.
Mikael Sjoberg | Bloomberg | Getty Images
SKELLEFTEA, Sweden ? Battery firm Northvolt will outline details of a new manufacturing plant in the U.S. before the start of the summer, CEO Peter Carlsson told CNBC Tuesday.
The Swedish company has been reevaluating some of its investment decisions in light of the U.S. Inflation Reduction Act — often referred to as IRA. The landmark legislation, which features green subsidies for businesses, is worth more than $300 billion.
Northvolt said in October it might prioritize expansion in the U.S. over Europe, despite having put forward a plan in May to open a new plant in Germany.
“We have also been working on a North American plant and, with [the] IRA, that plan kind of got turbo-boosted given the very strong incentives,” Carlsson, the CEO and co-founder of Northvolt, said.
He added that within “not too long [a] distance” the company will be able to detail what the new U.S. investment will look like. “I would be surprised if we have not done an announcement by latest in Q2 [second quarter],” he said.
Northvolt’s batteries are mostly used in electric cars. Some of its most important clients include Volkswagen, BMW and Scania. It’s also backed by firms like Goldman Sachs.
A worker walking past the coating ovens section at the Northvolt Ett factory in Skelleftea, north Sweden.
Jonathan Nackstrand | Afp | Getty Images
Its factory in northern Sweden employs about 1,500 of its 4,000 workers and is roughly three times the size of The Pentagon. It is currently installing its first 16 GWh of annual output, and the aim is to grow that to 60 GWh.
Carlsson said that what’s attractive with the President Joe Biden-backed IRA is the simplicity of the plan. An example would be the sale of electric cars. If an American consumer wants to buy a new electric vehicle, they’ll benefit from a tax credit if they opt for a model where 40% of the critical mineral and battery components are made in the U.S. — or a country with a U.S. free-trade agreement.
Still committed to Germany
This threshold rises by increments of 10 percentage points every year until it hits 100% in 2028. Ultimately, it makes European EVs less attractive to buy given their likely higher price tag.
Despite the intentions to develop a factory stateside, Northvolt said it is still committed to opening the plant in Germany.
When asked if he still intended to go ahead with this project, Carlsson said: “Absolutely.”
However, he added: “We have also been clear that in order to put the real large amount of investments into the facilities and the equipment, we need to find a solution with different stakeholders, including the German government on, number one, how we can actually utilize that surplus [of] energy to an affordable and competitive long-term cost and, secondly, how we make sure that the total investment is done in an effective way.”
The manufacturing plant was expected to start producing its first batteries in late 2025 and create 3,000 jobs. The question therefore is not if, but rather when, the Swedish firm will make this investment in Germany. When asked which of the two locations, North America or Germany, would be ready first, Carlsson declined to answer.
Northvolt’s investment decision represents a wider dilemma for European businesses, who are caught in trade tensions between the U.S. and Europe. Officials in the EU have welcomed the IRA for contributing to a more sustainable economy, but have criticized it for discriminating against European firms.
These discussions come at a time when the U.S. is also pressuring European officials to be stricter on China, particularly when it comes to semiconductors. ASML, a Dutch manufacturer of chipmaking machines, has been under pressure from American policymakers to protect its unique technology from China.
This pressure from Washington could soon expand to battery makers, the CEO of Northvolt said.
“We will start seeing this more in the battery space too where countries and regions are getting more protective about IP [Intellectual Property],” he said.
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