The EU will try to save its biggest electric vehicle battery project, but it may already be too late

On the second working day, the new European Commission decided to provide subsidies to local producers in the areas of carbon-free energy, electric vehicles and hydrogen fuel. A total of 4.6 billion euros will be allocated for these three areas. The need for these funds did not arise today, and now it is already a lifeline – an urgent measure to support entrepreneurial efforts in Europe. But how many companies will be able to live to see a happy ending?

Image source: Northvolt

According to the announced rules, subsidy applicants must submit applications by April 24, 2025. After receiving the grant, they are required to sign an agreement by the first quarter of 2026. The audit of applications and assessment of the stages of grant implementation will be carried out by the relevant department of the European Investment Bank, which will become the main source of funding.

1 billion euros will be allocated to develop battery production in Europe to reduce dependence on a “single supplier” (read: China). It is noteworthy that this is exactly the amount needed to quickly save the Swedish company Northvolt from bankruptcy.

Last month, Northvolt, which embodied the EU’s green dream, found itself in deep crisis. The company remains the only European manufacturer of traction batteries for electric vehicles, but has already declared itself bankrupt and requested restructuring by the end of 2024. To continue operations, taking into account a staff reduction of 20% in all foreign branches of the company, it is necessary to find at least $1 billion in cash.

However, it is unlikely that Northvolt will be able to receive the full amount needed under the recently announced subsidy program. Most likely, its support will become possible only after the completion of debt restructuring. But Northvolt is not the only company in trouble in the EU. Automative Cells, backed by Stellantis, has already suspended construction of plants in Germany and Italy. Volkswagen has also scaled back plans to build battery factories in Europe and North America. All of these companies also require subsidies to continue operating normally.