HEIDE (dpa-AFX) - The first balls fly at exactly five minutes to twelve. The Swedish company Northvolt begins the construction of its "Gigafactory" for e-car batteries near Heide with a short interlude of this traditional open-air sport on the North Sea coast. Afterwards, Federal Chancellor Olaf Scholz (SPD), Vice-Chancellor Robert Habeck (Greens) and Schleswig-Holstein's Minister President Daniel Günther (CDU), among others, will press the start button for the foundation work on the first factory building. The plant also fuels hopes of making Germany less dependent on Asian battery manufacturers.

Factory being built at "Dithmarschen speed"

Talks on the construction of the 4.5 billion project did not start until 2021. Northvolt wants to have the first batteries rolling off the production line there by 2026. Scholz approvingly calls this "Dithmarschen speed". The energy transition has changed the rules of the game. It is windy and sunny in many places. However, these locational advantages are not yet being used as well everywhere in Germany as they are in Dithmarschen.

The federal and state governments are supporting the battery factory with around 700 million euros. In addition, there are possible guarantees for a further 202 million euros, which still have to be approved. Federal Economics Minister Habeck spoke of "one of the biggest industrial projects for the future of Germany". It will change many things on the west coast. "The start of construction in Heide shows that the transformation towards climate neutrality and growth go hand in hand if the will is there and the framework conditions are right." The so-called Gigafactory is a beacon example of the environmentally and climate-friendly transformation of industry.

Dithmarschen is considered a structurally weak region and wants to benefit from Northvolt and the expected 10,000 jobs in the surrounding area. "This will be an initial spark," said Günther. Schleswig-Holstein's decision to focus on green electricity was the right one. The small state needs help from the federal government to expand the transport infrastructure around the plant. Bridges need to be renewed for the railroads.

Breaking the dominance of Asian manufacturers

The EU wants to break the dominance of Asian manufacturers in the production of e-car batteries with factories like the one in Heide. New production facilities are planned at several locations in Germany and Europe: VW subsidiary PowerCo is building a cell factory in Salzgitter and another in Valencia in Spain. Tesla is planning a battery factory next to its plant in Grünheide, while Opel's parent company Stellantis is building one in Kaiserslautern with Mercedes-Benz and the energy group Total.

Recently, however, the mood has cooled considerably. High electricity prices in Germany are a particular concern for the industry. Battery production requires a lot of electricity. In addition, the USA and Canada have been offering high subsidies since US President Joe Biden's Inflation Reduction Act. VW has already shelved plans for a third battery plant in Europe and is building in Canada instead. "At the moment, it is much cheaper to produce battery cells there and import them to Europe instead of manufacturing them here at the site," VW works council head Daniela Cavallo recently criticized in the German magazine "Der Spiegel"

So far, the market for e-car batteries is firmly in Asian hands. According to the South Korean market research company SNE Research, more than half of all battery cells will come from manufacturers in China in 2023. German car manufacturers have also mostly sourced the batteries for their electric cars from Asia or European plants of local companies such as the CATL site in Arnstadt near Erfurt, which will open in 2023. Due to the ramp-up of electromobility, experts expect demand for battery cells to rise sharply. Management consultants Roland Berger and McKinsey assume that demand will increase almost sevenfold by 2030, from around 700 gigawatt hours to between 4700 and 4900 gigawatt hours.

What Northvolt is planning in Schleswig-Holstein

"Northvolt Drei" near Heide is set to provide 3000 direct jobs when production is fully ramped up in 2029. Up to one million battery cells for electric cars are planned per year. Northvolt CEO Peter Carlsson referred to the energy surplus in the windy region. "We have found the perfect location." The region has welcomed the company, which is only seven years old, with open arms.

The company wants to produce nothing less than the "greenest battery in the world in series". The plant will use treated waste water from the region for cooling purposes. Heat from production could be supplied to a possible district heating network in the town of Heide. A plant for recycling old batteries from discarded electric cars is also being considered.

According to Carlsson, suppliers are to move to the Dithmarschen district in order to guarantee the necessary components for battery construction. "Then we still need certain raw material supplies, and we will, for example, get some active material from our factory in Sweden." By recycling used batteries, a closed-loop system can be established in the long term. "In 15 years, when the fleets are fully electrified, I think we will switch to almost 100 percent recycling." Northvolt claims to have an order backlog of more than 50 billion dollars. Its customers include the Volkswagen Group, BMW, Scania and Volvo Cars. A research and development campus for battery cells is located in Västerås, Sweden. Since 2022, the company has also been producing at a plant in Skellefteå, Sweden.

The Association of German Engineers (VDI) described the plant as an important step for sustainable battery production in Germany. "Here we can make a contribution to making Germany independent of foreign production," wrote VDI Director Adrian Willig.

For the environmental organization Greenpeace, Heide shows what a modern and sustainable industrial country can look like. "This battery factory uses green electricity directly where it is generated, it brings value creation back into the country and can give momentum to the far too slow transition to clean e-cars in Germany," said mobility expert Benjamin Stephan.

The President of the Kiel Institute for the World Economy, Moritz Schularick, praised the acceleration of the energy transformation through the new factory, but criticized the high demand: "Northvolt's investment would probably have been worthwhile even with far fewer subsidies, which only pleases the shareholders." The taxpayers' money was now being wasted elsewhere, for example on investments in education or infrastructure.

Dissatisfaction also spread among a group outside the cordoned-off factory site. According to the police, around 150 people with 50 tractors demonstrated against the federal government's agricultural policy, among other things./akl/DP/nas