EU, EIB to support battery manufacturing amid Northvolt’s bankruptcy

The European Commission and European Investment Bank (EIB) launched a partnership to support investments in the battery manufacturing sector in the European Union. The deal was announced soon after Sweden-based Northvolt filed for bankruptcy in the United States. Other European manufacturers and startups are struggling as well, amid Asian competition, lack of financing and the deindustrialization trend.

A EUR 200 million top-up – loan guarantee – is slated for the InvestEU program, for innovative battery manufacturing projects. The new European Commission and EIB said the funds would support investments by addressing financial challenges.

The package is coming from the EU’s Innovation Fund, under a new partnership between the two institutions, alongside EUR 1 billion in grants for electric vehicle battery cell manufacturing projects. On top of it all, EIB said it would invest another EUR 1.8 billion in the wider value chain, after providing an overall EUR 6 billion in financing over the past six years.

The joint efforts will result in EUR 3 billion of public support in total for the development of a competitive and sustainable European battery industry, according to the EU’s executive body.

Loan guarantees to help startups reach commercial battery manufacturing phase

The EUR 200 million InvestEU guarantee top-up will enable additional EIB venture debt operations. The idea is to help companies bridge the gap between the phase of research and development and large-scale commercial deployment.

The support package excludes mining and extraction

The funds are seen reducing market failures. They are supposed to leverage public funding to mobilize private investment. The goal is to establish innovative and resilient supply chains for energy storage in Europe, the announcement adds.

Support is earmarked for a wide range of battery technologies, such as developing advanced materials, components manufacturing and innovative recycling techniques, the European Commission explained. The funding prioritizes technological innovations beyond basic cell or pack assembly and excludes mining and extraction activities.

The bank is tasked with evaluating projects including their commercial and technical viability. Potential applicants will find more information on the EIB venture debt webpage and apply through the EIB MyRequests portal.

The lender said it supports the wider battery value chain, including raw materials, research, production, charging infrastructure and recycling.

The partnership is also oriented toward circular economy standards and lowering the environmental impact of batteries.

EU determined to make battery manufacturing value chain more resilient, competitive

Together, the InvestEU top-up, EIB’s own-resource investments and the launch of the EUR 1 billion electric vehicle battery call highlight the commitment of the European Commission to make the battery manufacturing value chain more resilient and more competitive, the statement reads.

Hoekstra: Battery production is a priority for the clean energy transition

With an estimated total budget of EUR 40 billion from 2020 to 2030 from EU Emissions Trading System (EU ETS) revenues, the Innovation Fund aims to create financial incentives for companies to invest in cutting-edge low-carbon technologies and support Europe’s transition to climate neutrality.

InvestEU provides the EU with long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. The scheme consists of the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal.

“Europe is set on a path to become the first climate-neutral continent by 2050. Battery production is a priority for the clean energy transition in the transport and power sectors and beyond,” said European Commissioner for Climate, Net Zero and Clean Growth Wopke Hoekstra.

Germany to partially bail out Northvolt – report

Global demand for batteries for electric vehicles and energy storage is steadily rising, but the technology isn’t quite conventional yet. Among the headwinds are relatively high prices, supply chain issues and incomplete financing mechanisms.

The EU is especially troubled, given the lack of manufacturing capacities and domestic sources of battery materials, but above all the current deindustrialization trend. While European manufacturers of solar and wind power equipment are jeopardized mostly by Chinese competitors, the battery segment must compete with heavyweights from other Asian countries as well.

Notably, Northvolt recently sought protection from creditors in the United States as it was forced to launch restructuring. The Swedish company said it would complete the process in the first quarter of next year.

Seen as the future flagship player in EV battery manufacturing in the EU, Northvolt imploded without sufficient funding and amid a blow from losing BMW, which was supposed to become a major customer. Moreover, difficulties in getting its first factory going, in Sweden, contributed to the bankruptcy.

According to the latest reports, the government in Berlin will cover the company’s debt of up to EUR 620 million to Germany’s KfW Development Bank. Among other media rumors, the ailing manufacturer is said to have turned to Chinese companies, including Contemporary Amperex Technology Co. Ltd. (CATL), for talks about possible partnerships.