Billions in losses caused by Northvolt: Schleswig-Holstein's taxpayers affected!

Billions in losses caused by Northvolt: Schleswig-Holstein's taxpayers affected!

The bankruptcy of Northvolt, a Swedish battery manufacturer, has the potential to trigger a huge tax debacle for Germany. “Merkur reported that the insolvency could probably cost more than a billion euros.” This sum represents the investments that the federal government and Schleswig-Holstein have put into the planned plant in Heide. In 2020, the federal government provided a guarantee of 430 million euros for the main plant in northern Sweden and agreed to a further guarantee of 600 million euros at the end of 2023. This financial support was intended to strengthen the company and possibly create equity capital, with the federal government receiving shares if successful.

But the situation has now changed dramatically. Northvolt was once hailed as Europe's beacon of hope for independent battery manufacturing, but reports of massive losses in 2023 raised alarm bells. "NDR highlights that the company has now filed for Chapter 11 to reorganize its finances. This could mean that creditor claims are deferred or reduced," which may give Northvolt a reprieve. The managers can keep their positions and no insolvency administrator is appointed, which is unusual in Germany.

The impact on the region and jobs

Northvolt originally planned to create over 3,000 new jobs in Heide. However, the construction work now leaves the future of many people in the region uncertain. According to the reporting, the current status of construction work could lead to a further setback for Schleswig-Holstein and the entire German battery cell production. Prime Minister Daniel Günther also emphasizes the urgency of establishing our own production line in Germany.

"Nau adds that despite the bankruptcy, construction work in Heide will continue, although it is unclear for how long. It remains to be hoped that new investors will come into play to save the factory and stabilize the parent company in Sweden. However, Volkswagen, the largest shareholder, is already in a stressful situation – the devaluation of their shareholding has hit the company hard.

Lack of transparency and further uncertainties

A profound problem is the lack of information communicated throughout Northvolt's process, such as not being informed of financial issues in a timely manner. The investigative committee of the Schleswig-Holstein state parliament will have to deal intensively with the responsibilities and processes. Hundreds of pages of Northvolt files have been released so far, but much information remains blacked out, making the predicament difficult to resolve.

The federal government sees the development of battery cell production as a strategic concern for national and European industry. It is estimated that 90 percent of battery demand will be met within the EU by 2030. Nevertheless, the road is long because other projects, such as the planned battery factory at Opel in Kaiserslautern, are also on hold.

Ultimately, Northvolt's bankruptcy could not only change the economic landscape in Germany, but also the future development of electromobility. After all - even if the industry has cooled down at the moment - the demand for batteries will remain the driving force for the next few years. Northvolt's next steps and investor reactions will be crucial for further development. The Schleswig-Holstein region and the German vehicle industry can therefore hope for a glimmer of hope while the uncertainties continue.