Northvolt Launch: The Greenest Battery Factory in the World Against Asian Dominance
At exactly five minutes to twelve, the first balls are thrown. With a short field bowling demonstration of this traditional outdoor sport on the North Sea coast, the Swedish company Northvolt begins the construction of its "Gigafactory" for electric car batteries near Heide. Afterwards, among others, Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens), and Schleswig-Holstein's Prime Minister Daniel Günther (CDU) press the start button for the foundation work of the first factory building. The plant also fuels the hope of making Germany more independent from Asian battery manufacturers.
Factory arises at "Dithmarschen speed"
It was only in 2021 that talks began about the construction of the 4.5 billion project. By 2026, Northvolt aims to have the first batteries rolling off the line there. Scholz approvingly calls this "Dithmarschen speed." The energy transition has changed the rules of the game. It is windy and sunny in many places. However, these location advantages are not yet being used as effectively everywhere in Germany as they are in Dithmarschen.
The federal and state governments are funding the battery factory with around 700 million euros. In addition, there are possible guarantees of a further 202 million euros, which still need to be approved. Federal Minister for Economic Affairs Habeck spoke of "one of the largest industrial projects for the future of Germany." Much on the west coast will change as a result. "The start of construction in Heide shows that the transformation towards climate neutrality and growth go hand in hand when the will is there and the conditions are right." The so-called Gigafactory is a beacon example of the environmentally and climate-friendly transformation of the industry.
Kick-off for the structurally weak region
Dithmarschen is considered a structurally weak region and wants to benefit from Northvolt and the expected 10,000 jobs in the area. "This will indeed be a kick-off," said Günther. Schleswig-Holstein's path of relying on green electricity was the right one. For the expansion of transport infrastructure around the plant, the small state needs the help of the federal government. Bridges need to be renewed for the railway.
Breaking the Dominance of Asian Manufacturers
With factories like the one in Heide, the EU aims to break the dominance of Asian manufacturers in the production of electric car batteries. New production facilities are planned at various locations in Germany and Europe: VW subsidiary PowerCo is building a cell factory in Salzgitter and another in Valencia, Spain. Tesla is planning a battery factory next to its plant in Grünheide, and Opel's parent company Stellantis, together with Mercedes-Benz and energy giant Total, is constructing one in Kaiserslautern.
Recently, however, the mood has cooled significantly. High electricity prices in Germany, in particular, are causing concern in the industry. Battery production requires a lot of electricity. Additionally, the USA and Canada have been offering high subsidies since US President Joe Biden's Inflation Reduction Act. VW has already put plans for a third battery plant in Europe on hold and is building in Canada instead. “At the moment, it is significantly cheaper to produce battery cells there and import them to Europe rather than manufacture them here on-site,” VW Works Council Chairwoman Daniela Cavallo recently criticized in the “Spiegel.”
Electric Car Batteries: Firmly Rooted in the Far East
So far, the market for electric car batteries has been firmly in Asian hands. More than half of all battery cells in 2023 came from manufacturers in China, according to South Korean market research firm SNE Research. German automakers also mostly source the batteries for their electric cars from Asia or European plants of companies based there, such as the CATL plant in Arnstadt near Erfurt, which opened in 2023. Due to the ramp-up of electromobility, experts expect a significantly increasing demand for battery cells. Consulting firms Roland Berger and McKinsey predict that demand will almost septuple by 2030, from the recent approximately 700 gigawatt hours to 4700 to 4900 gigawatt hours.
What Northvolt Plans in Schleswig-Holstein
"Northvolt Drei" in Heide is expected to offer 3,000 direct jobs once production is fully ramped up by 2029. Up to one million battery cells for electric cars are planned per year. Northvolt CEO Peter Carlsson pointed to the energy surplus of the windy region. "We have found the perfect location." The company, which is only seven years old, was welcomed with open arms. The company aims to produce nothing less than the "world's greenest battery in series." The plant is to use treated wastewater from the region for cooling purposes. Heat from production could be supplied to a possible district heating network for the city of Heide. A facility for recycling old batteries from decommissioned electric cars is also being considered.
Suppliers to Settle
In order to guarantee the necessary components for battery production, suppliers are to move to the Dithmarschen district according to Carlsson. "Then we still need certain raw material deliveries, and we will, for example, bring some active material from our factory in Sweden." By recycling old batteries, a circular system can be established in the long term. "In 15 years, when fleets are fully electrified, I think we will switch to almost 100 percent recycling." According to Northvolt, the company has an order backlog of more than 50 billion dollars. Customers include the Volkswagen Group, BMW, Scania, and Volvo Cars. A research and development campus for battery cells is located in Västerås, Sweden. Since 2022, the company has also been producing in a plant in Skellefteå, Sweden.
Greenpeace: This is what a modern industrial country can look like
The Association of German Engineers (VDI) described the plant as an important step towards sustainable battery production in Germany. "Here we can contribute to making Germany independent of foreign productions," wrote VDI director Adrian Willig. For the environmental organization Greenpeace, Heide demonstrates what a modern and future-proof industrial country can look like. "This battery factory uses green electricity directly where it is generated, it brings value creation back into the country, and it can give a boost to the previously far too slow transition to clean electric cars in Germany," said mobility expert Benjamin Stephan. The president of the Kiel Institute for the World Economy, Moritz Schularick, praised the acceleration of the energy transformation through the new factory but criticized the high level of funding: "Northvolt's investment would probably have been profitable with far fewer subsidies, which only pleases the shareholders." The tax money is now missing elsewhere, such as in investments in education or infrastructure.
Dissatisfaction also arose among a group outside the cordoned-off factory premises. According to police, around 150 people demonstrated with 50 tractors, among other things, against the federal government's agricultural policy.
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