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Europe Attracts Major Battery Manufacturers with Two New Gigafactories


In a bid to gain an edge in the subsidy race with the United States, Europe has attracted two major electric vehicle battery manufacturers with plans to invest around 10 billion euros ($11 billion) in new factories. These developments emerged after Europe eased its state aid regulations for green industry projects.

Both plants, which aim to commence production in 2026, are expected to employ thousands of people and supply batteries to European car manufacturers.

Swedish battery maker Northvolt has indicated it may favor Heide in northern Germany for its factory, given that the proposed subsidies are approved. Subsidies for Northvolt, expected to be over 600 million euros, are currently pending approval. This news follows months of speculation that the company would opt for an investment in North America over Europe.

Meanwhile, Taiwan's ProLogium has announced a new plant in the French city of Dunkirk. The decision came after France offered enticing deals and competitive power prices. With Taiwan being a focal point in the ongoing tensions between Washington and Beijing, ProLogium also sought to secure an overseas base.

Despite housing carmakers like Volkswagen and BMW, Europe is still heavily dependent on Asian countries for sourcing and processing raw materials like lithium, cobalt, and manganese for EV batteries. High energy costs and a lack of subsidies comparable to the $430-billion U.S. Inflation Reduction Act have led companies from Volkswagen to utility Enel and cement maker Holcim to urge the European Union to boost investment encouragement.

With the advent of Europe's 'Temporary Crisis and Transition Framework' (TCTF) which simplifies conditions for countries to grant aid to green projects, Northvolt has been able to solidify its plans to build in the region.

Northvolt, in collaboration with Volkswagen, is at the forefront of the race among a handful of European players to establish a home-grown battery industry, despite a large part of the planned capacity in Europe set to be owned by Asian companies.

French President Emmanuel Macron personally lobbied for ProLogium's factory, which will be its first overseas car battery plant, ensuring France outpaced competitors like Germany and the Netherlands.

The subsidies for Northvolt, if approved, would be the first granted by Germany under Europe's TCTF program. This initiative was adopted in response to Russia's invasion of Ukraine and later expanded to support green transition projects. The plan still requires the approval of the European Commission.

Notably, Northvolt has also hinted at the potential construction of a second plant in parallel, potentially in North America.

Foreign and domestic companies have shown a keen interest in investing in Germany to cater to its burgeoning EV industry. Among these are CATL, which is ramping up production at its plant near Erfurt in Germany, and BASF, which is constructing a battery materials site in Schwarzheide, eastern Germany. Meanwhile, U.S. company Microvast has already built a factory in Ludwigsfelde, south of Berlin.


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