The European Investment Bank (EIB) approved a €52.5 million loan for the Swedish battery cell manufacturer Northvolt, as part of the Horizon 2020 Financial Instruments. The funding, supported by the European Commission through InnovFin, under the “Energy Demo Projects” facility, will be used for the construction and operation of a first-of-a-kind demonstration plant in Västerås, Sweden, for manufacturing of li-ion batteries. The EIB’s goal with the loan is to help improve EU’s competitiveness, against Asian and American producers.
After finalising the negotiations and signing the deal, Northvolt will begin construction in several months. Northvolt will aim to show the commercial viability of the concept and industrialise batteries, used in transport, stationary storage, industrial and consumer applications.
The new site at Västerås will include a research facility and will employee around 300-400 people. It will also pave the way to a larger scale li-ion battery factory in Skellefteå, which will target production of 32 GWh battery capacity annually.
According to the vice-president of the EIB, Ambroise Fayolle, “the bank is fulfilling one of its main purposes by supporting this type of research and development in Europe. With the growing momentum of clean energy and electric mobility, batteries will become ever more important. Europe is currently lagging behind when it comes to battery manufacturing and this highly innovative and strategic project deserves European backing to fill that gap.”
Northvolt’s CEO, Peter Carlsson, a former Tesla employee, believes that “Europe is moving rapidly towards electrification. Northvolt’s objective is to build the world’s greenest battery to enable the transition. With the support from the EIB and the EU, Northvolt will be one step closer to establishing a competitive European battery manufacturing value chain.”
Batteries are a strategic component for EU’s competitiveness in a new European market worth €250 billion annually, as of 2025. Thus, the EU needs to react quickly and pool all available instruments at the national and European level, while collaborating on prospective partnerships through the value chain, within the European Battery Alliance. Speaking on Monday, vice-president of the European Commission, Maroš Šefčovič, said that the objective of the European Battery Alliance would be to build 10 to 20 “giga-factories which will be competitive and delivering high-quality products to global markets”
EU’s loans are enabling real market-creating innovation. The EU is currently leading the fight against climate change, as 40% of all patents for renewable energy belong to European companies. Nonetheless, most of the innovations are outsourced and produced elsewhere, which hurts EU’s competitiveness .
Hence, projects like the new Northvolt facility will help to improve the current state and reduce dependence on imported batteries. Producing batteries in the EU will also bring down costs of electric cars, as battery packs currently represent 30% and 50% of the total cost of an electric vehicle. As battery costs decline, electric vehicles will become much more affordable, eventually promoting electrification and helping tackle climate change.