Electric Vehicle Battery Maker Company Will Invest IDR 162 Trillion In Europe

Northvolt from Sweden will vote for Heide in northern Germany. (photo: twitter @northvolt)

JAKARTA - Several electric vehicle battery manufacturers plan to spend about 10 billion euros (Rp162 trillion) to build factories in Europe. This they announced on Friday, May 12 after Europe relaxed state aid rules for green industry projects in a bid to win subsidies with the United States.

The two factories will start production in 2026, will absorb thousands of workers, and will supply batteries to car manufacturers in Europe.

After several months worried that the company would choose to invest in North America rather than in Europe, Northvolt from Sweden said it would elect Heide in northern Germany as their factory site if subsidies were approved, which sources closest to the matter estimated at more than 600 million euros.

Meanwhile, Taiwan's ProLogium announced the construction of a new plant in the French city of Dunkirk after France offered companies competitive electricity incentives and prices, company executives said.

With Taiwan at the focal point of tension between Washington and Beijing, the company also wants to have a base overseas.

Europe, which is home to automakers like Volkswagen and BMW, has sought to reduce its dependence on Asian countries for batteries that will power environmentally friendly electric cars, although the region still relies heavily on Asia in terms of raw materials such as lithium, cobalt, and manganese.

The high energy price and lack of subsidies comparable to the US Inflation Reduction Act of $430 billion have prompted companies from Volkswagen to utility firm Enel and cement producer Holcim to ask the European Union to do more to encourage investment.

It is estimated that Volkswagen will announce the location of a battery factory in Europe late last year, but the company said in March that it was still awaiting further clarity from Europe over subsidies before making a decision.

For Northvolt, Europe's 'Temporary Crisis and Transition Framework' (TCTF) framework, which simplifies conditions for countries to provide assistance to green projects and provides more freedom to Germany in providing support for the battery factory, has helped strengthen their plans to build in the region, a spokesman said.

It's not clear how energy prices can be lowered, the spokesperson added, although supply is not a problem due to the presence of a lot of offshore wind energy near the planned factory site.

Northvolt, along with Volkswagen, is the most advanced European company in paving the way for the local battery industry, with most of its planned capacity to be owned by Asian companies.

The plant proposed by ProLogium from Taiwan will be their first foreign car battery factory. French President Emmanuel Macron is trying to win the factory over other competitors such as Germany and the Netherlands.

Both Germany and France have provided subsidized incentives after the United States last year revealed massive tax subsidies to encourage domestic manufacturing.

Subsidies for Northvolt will be the first subsidy provided by Germany under the European TCTF program, which was adopted in response to Russia's invasion of Ukraine and expanded this year to support green transition projects.

The support still needs approval from the European Commission.

"A second factory can also be built elsewhere in parallel," a Northvolt spokesman said, including in North America.

Foreign and domestic companies have invested in Germany to meet the needs of the growing electric car industry. CATL, which has grown rapidly outside China, is increasing production at its factories near Erfurt, Germany, and BASF is building a battery raw material site in Schwarzheide, East Germany.

Meanwhile, Microvast from the United States has built a factory in Ludwigsfelde, south of Berlin.