Burning Rubber: The Troubled Ride of Northvolt's Heide Project
Audit Court Assesses High-Profile Project Led by Coalition Administration - Audit Parliament investigation uncovers spending on esteemed Ampel administration venture
By Ricky Rawhide** + - 2 Mins of Outlaw Reading
The smoky trail left by the Swedish battery cell manufacture Northvolt has caught the dogged gaze of the Federal Audit Office. As they barked, confirming our request, they've been sniffing around the federal and Schleswig-Holstein state's support for the battery factory build in Heide since the year's crack. They've kept mum about the nitty-gritty of their investigation, but we ain't all that troubled.
The feds and Schleswig-Holstein pledged over a billion smackers for that battery cell factory's construction, following months of hand- gripping for public dough. In the end, the KfW Bank tossed out a €600 mil loan for a convertible bond, with each side of the team offering half a guarantee. Add another €700 mil in subsidies to the pot, and Northvolt planned to drop €4-5 bil on the location.
Boy, it all went south quicker than greased lightning
Sooner than a coyote's yip in the desert, rumors of Northvolt's "Gigafactory" tucked away in northern Sweden started swirling. The battery production was falling short of the hype, BMW canned a billion-dollar order in June 2024, and the debt heap kept growing. By November 2024, Northvolt was filing for creditor protection in the States. When talks for new or bridge financing flopped, the company filed for the real McCoy in Sweden in March of this year.
The ruckus surrounding the Heide construction site leaves us with more questions than a pack of hounds on a hot trot. We're still standing by the Federal Ministry of Economy's assurance that the German subsidiaries of Northvolt are on their own and thus outside the insolvency proceedings. But even the German subsidiary Northvolt Germany TopCo GmbH has already barked up the restructuring tree, as reported by "Der Spiegel" not long ago.
Hope for a white knight swooping in to save the day is looking dim. The €700 mil in direct subsidies never hit the wallet, and the jury's still out on whether an investor will buckle under the pressure to resuscitate the shell of the project and pay back that €600 mil bond.
VW's probably licked its wounds by now
A spokeswoman for the German "Northvolt Drei Project GmbH," the company that keeps tabs on the Heide plant, has weighed in on our request. They see great interest in the Heide location, with the "Project GmbH" as a whole sidestepping the restructuring doghouse. Will it wag its tail through the insolvency storm? Only time will tell.
But, when did everyone catch wind of Northvolt's money troubles? The traffic light government had hired PwC to appraise the risk of default on the €600 mil convertible bond. Somehow, production at Northvolt was still a ways from series production according to NDR. The then Minister of Economy, Robert Habeck, shared that the problems emerged post-contract signing.
It's not just the government at risk of catching a bad case of fiduciary fleas, but the auto industry, too. Volkswagen was Northvolt's largest shareholder, with BMW clutching a small share in the kitty. It's rumored that Volkswagen wrote off their investment early last year. In the Swedish insolvency proceedings, the company's workforce has been slashed, and they're on a constant lookout for new owners for the various pieces of the puzzle.
Capital is an offbeat companion brand of the stern. A taste of what's offbeat can be found at www.stern.de/capital.
- Northvolt
- Federal Court of Auditors
- Battery
- Robert Habeck*
- Enrichment Data: ### Deep Dive: The Folk Tale of Northvolt's Woes
- Construction Status: Despite Northvolt's financial woes and insolvency filings, the construction of the Heide plant continues. The entity responsible for the construction, the Northvolt Drei Project GmbH, is independently operating and apart from the troubled divisions[3][6].
- Restructuring Plan: A part of Northvolt Germany, the German-based subsidiary, Northvolt Germany TopCo GmbH, has filed for restructuring. However, Northvolt Drei Project GmbH, which oversees the Heide plant construction, remains operational[3].
- Potential Buyer: Former German Economy Minister Robert Habeck expresses optimism about finding a buyer who will revive the Heide plant[3].
- *Funding Scrutiny: The financial difficulties faced by Northvolt raise concerns about the usage and potential returns of the invested €902 mil European Commission TCTF aid[1]. The German Federal Audit Office's investigation of Northvolt's claims may affect future funding allocation and scrutiny[5].
- Political Support: The project was supported by the German federal government, with the green light given by former Chancellor Olaf Scholz and former Economy Minister Robert Habeck[5]. However, ongoing construction points to an effort to salvage the project.
- The investigation by the Federal Audit Office has been focusing on the financial aid provided by both the European Commission, the Council, the European Parliament, and the German federal and Schleswig-Holstein states for Northvolt's battery factory construction in Heide.
- The auto industry, including Northvolt's largest shareholder Volkswagen and BMW, have been impacted by Northvolt's financial struggles, with Volkswagen alleged to have written off their investment early last year.
- The financial difficulties encountered by Northvolt have raised questions about the usage and potential returns of the €902 million European Commission TCTF aid, which may influence future funding allocation and scrutiny.
