Bottom Line/Why you should read this: Having a green angle to you business will unlock much more public and private funding. We in EAST CCI are happy to advice you based on our knowledge about the political framework in Norway and abroad.
Speaking at the release of its fourth-quarter financial results for 2023, Ford Motor Company CEO Jim Farley said the company is “adjusting our capital [investment], switching more focus onto smaller EV products”. Larger more expensive EV’s are not selling as planned in the mainstream market.
That meant at the beginning of October 2023, Ford halted construction of its massive Blue Oval Battery Park in the US state of Michigan, barely seven months after announcing the $3.5 billion project. Ford also stopped its plans to build a battery plant for commercial electric vehicles near Ankara, Türkiye together with Turkish conglomerate Koç Holding and South Korean battery manufacturer LG Energy Solution.
Also Volkswagen has postponed a fourth battery factory in Europe in the Czech Republic indefinitely, the German carmaker’s chairman Oliver Blume said this week. Only three fully owned Volkswagen battery factories have now been greenlit. The first will be in Salzgitter, Germany, with a production of 40 GWh planned for 2025, while the second factory is located in Valencia, Spain – also with 40 GWh capacity (with potential to expand to 60 GWh).
The third factory is destined for St. Thomas, Ontario, which would be the first PowerCo (Volkswagens fully owned integrated battery company) cell plant outside of Europe. VW’s decision to go ahead with the massive 90 GWh facility in Canada was no doubt made possible by eye-watering tax breaks of more than US$10 billion offered by Ottawa.
But others continue expanding, and one such example is Northvolt AB. EU decided to back the company with a $5 billion non-recourse project financing. The deal represents the largest green loan raised in Europe to date and is the first loan raised through Northvolt’s Green Finance Framework created in 2023.
Back in 2022 Northvolt also signed a MoU with the north German state of Schleswig-Holstein and the region of Heide for the development of a 60 GWh lithium-ion battery factory. The project has now (February 2024) achieved the long-awaited breakthrough as Northvolt has signed a so-called implementation agreement with the local municipalities for the urban land-use planning process.
An important milestone for the FID of the plant was the state aid approval of another 900 million euros, which was also approved by the EU Commission in January of 2024. The planned state and federal subsidies may therefore be distributed in the form of a direct grant of 700 million euros and a guarantee of 202 million euros. “Without the aid, Northvolt would build the plant in the United States, where it would be supported in particular under the Inflation Reduction Act,” the EU Commission wrote a week ago.
It all but shows that the green transition needs financing, and the package means that Northvolt has now secured more than $13 billion in equity and debt to enable its expansion in Europe and North America, with the facilities Northvolt Ett (Skellefteå, Sweden), Northvolt Dwa (Gdansk, Poland), Northvolt Drei (Heide, Germany), Northvolt–Volvo Cars joint venture gigafactory ‘NOVO’ (Gothenburg, Sweden), Northvolt Fem (Borlänge, Sweden), Northvolt Cuberg (San Leandro, US) and the recently announced Northvolt Six (Montreal, Canada)!
As a last note on the matter, the US Company Freyr puts all their bets on their Giga America factory in Bridgeport, Coweta County, Georgia and apply for financing under the DOE Title 17 program funded by the Inflation Reduction Act, to build a factory with an initial battery cell production module of approximately 34 GWh for a preliminarily estimated capital investment of $1.7 billion.
