The European Investment Bank (EIB) is on the verge of granting €350 million to a Swedish company for what will be Europe’s first mega-sized battery factory, the EU lender announced on Thursday (16 May).
Northvolt will build a Tesla-inspired battery ‘gigafactory’ in the northern reaches of its Scandinavian homeland if a loan agreement with the EIB is approved. The final sign-off for the investment is expected to be a mere formality.
The initial tranche of EIB money will be used to build the first part of the project, with annual battery output expected to reach 16 gigawatt hours and be completed in 2020. That roughly equates to about 250,000 electric vehicle batteries per year.
When operating at full capacity, the Northvolt factory will be able to produce 32 GWh of battery capacity every year. For comparison, Tesla founder Elon Musk recently revealed that the original gigafactory in Nevada is currently producing 23 GWh against a 35 GWh capacity.
Northvolt CEO Peter Carlsson actually spent four years at Tesla and recently said that his company will need to raise about €1.6 billion to complete the first phase of construction. He added in an interview that “Europe will need at least ten gigafactories by 2030” to meet its needs.
The first site will be used to assemble batteries, prepare materials and recycle used components. Batteries produced at the factory will be used in electric cars, grid storage and industrial applications.
European Commission Vice President Maroš Šefčovič has taken a keen interest in developing the EU’s domestic battery industry and believes that Europe needs “between ten and twenty gigafactories” in order to tap into a market predicted to be worth an annual €250bn by 2025.
In a statement, Šefčovič said: “The EIB and the Commission are strategic partners under the EU Battery Alliance. I welcome the significant support proposed by the EIB to Northvolt gigafactory.”
The Battery Alliance is an initiative, now in its second year, which aims to dramatically boost the EU’s homegrown battery production capacity. Asia currently holds a massive 80%+ share of the global market. But European companies are now starting to realise that focusing on quality over price could be crucial.
Green standards for batteries are currently being set by the EU and the Northvolt facility could prove to be a blueprint for future projects, as it is set to tap into 100% renewable power when it goes online.
Sweden’s business minister, Ibrahim Baylin, said that “it is important for Sweden and the rest of the EU to produce battery materials and battery cells, based on green, Swedish electricity”.
Clean mobility NGO Transport & Environment told EURACTIV that the announcement was “good news for the EU battery industry” and will stimulate more private investment.
Expert Julia Poliscanova pointed out that EIB rules dictate “how clean the energy is, where the resources come from and other environmental requirements. This will enable Europe to lead in green batteries and make them compete on quality.”
[Edited by Frédéric Simon]