Controversy Surrounds Northvolt Battery Plant in Schleswig-Holstein

The Schleswig-Holstein state parliament is embroiled in heated discussions regarding the financial backing provided to Northvolt, a Swedish manufacturer of electric vehicle (EV) battery cells. The main concern centers around the extent of taxpayer money at risk as Northvolt faces significant financial difficulties.

Initially, Northvolt's project was hailed as a flagship initiative, particularly appealing to politicians as it aimed to create jobs in regions with high unemployment. A proposed site near Heide in Schleswig-Holstein was among those earmarked for new production facilities. However, the project's current financial instability raises questions about the terms under which federal and state financial guarantees were granted.

During a joint meeting of the Finance and Economic Committees, opposition members criticized the government's reluctance to fully disclose documents related to the funding of Northvolt's planned battery factory. They expressed frustration over the numerous redactions in the released records. Nonetheless, there is bipartisan agreement on the need to publish a consultancy report from PwC, which is crucial to understanding the decision-making process.

Economic Minister Claus Ruhe Madsen assured that all stakeholders involved in the deliberations regarding the convertible bond for Northvolt and its direct funding had carefully assessed the available documents and information at the time. He acknowledged that many of the circumstances currently known about Northvolt were not understood during the decision-making process. The government had weighed the opportunities against the risks before proceeding with the bond issuance.

Madsen added that there was a general optimism surrounding the project, with many believing that its establishment would significantly bolster Schleswig-Holstein's industrial landscape. He expressed regret over the project's downturn, noting that everyone had hoped for a more successful outcome.

Members of the state parliament have had access to government records regarding Northvolt's funding for some time, and several documents have been gradually released. However, many remain heavily redacted, raising concerns among opposition figures. Former Economic Minister Bernd Buchholz, now in opposition, stated he was no longer interested in non-public discussions, highlighting that a vast majority of questions regarding a cabinet proposal were blacked out.

Buchholz pointed to evidence in the documents indicating a strong desire among ministry officials for more information on the associated risks. He questioned who ultimately made the decision to proceed with Northvolt's funding despite a clear recommendation against it from experts within the ministries. Buchholz suggested that an investigation committee might be necessary to further probe the matter.

The Chief of the State Chancellery, Dirk Schrödter, defended the funding as a collective decision by the state government, naming key officials involved in the process. He criticized the opposition for their stance, asserting they had been aware of the documentation for a significant period.

In light of ongoing discussions, the economic implications for taxpayers remain uncertain. Five years ago, the federal government agreed to underwrite a financing tranche for Northvolt from commercial banks, amounting to $525 million, to ensure battery supply for the German automotive sector. Additionally, Northvolt received approximately EUR600 million from the state development bank KfW for the construction of the Heide factory, alongside EUR20 million for interest and procedural costs, with both federal and state governments sharing the liabilities equally. Reports indicate that over half of this convertible bond has already been utilized.

On top of this, the European Commission approved direct funding from both the federal and state levels, totaling around EUR700 million. However, these funds have yet to be disbursed. Meanwhile, it was revealed during the committee meeting that Northvolt has completely halted production at its main site. The company's insolvency administrator stated that the production of battery cells at the Skellefteå facility would cease by the end of June, following a period of operation with a reduced workforce, primarily supported by its sole existing customer, Scania.