As U.S. Races Ahead, Europe Frets About Battery Factory Subsidies

But if Europe doesn’t move quickly to aid the battery industry, “you will really lose momentum on the ground versus the North American market,” said Dirk Harbecke, chief executive of Rock Tech.

Chinese battery companies have largely avoided the United States for fear of a political backlash. But Chinese battery firms have announced investments in Europe worth $17.5 billion since 2018, according to the Mercator Institute for China Studies and the Rhodium Group.

Political tension between Western governments and China has put German carmakers in a delicate position. They do not want to be overly dependent on Chinese supplies, but they cannot afford to displease the Chinese government.

BMW, Volkswagen and Volvo plan to buy cells from a factory in Arnstadt, Germany, run by CATL, a Chinese company that is currently the world’s largest maker of electric vehicle batteries.

To balance their reliance on Chinese suppliers, European executives and leaders are keen to work with Northvolt, whose chief executive, Peter Carlsson, oversaw Tesla’s supply chain for more than four years.

Northvolt wants to control all the steps of making batteries, including refining lithium and recycling old cells. That should help Europe achieve supply chain independence and ensure that batteries are produced in the most environmentally responsible way possible, said Ms. Nehrenheim, who is also a member of the Northvolt management board. “We’re de-risking Europe,” she said.

The company develops manufacturing techniques at its complex in Vasteras. Northvolt’s first full-scale factory, at a site in Sweden 125 miles south of the Arctic Circle chosen for its abundant hydropower, is the size of the Pentagon. Northvolt also plans to build a U.S. factory, but has not yet announced a site.

Still, the company is ramping up production and is not among the world’s top 10 battery suppliers, according to SNE Research, a consulting firm. And construction on its Hamburg plant is on hold until E.U. officials approve German subsidies.

Ana Swanson and Liz Alderman contributed reporting.

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