The plight of Swedish battery manufacturer Northvolt is coming to a head. In addition to the €600 million already known, German taxpayers could lose an additional €300 million. The reason for this is government guarantees and aid that were originally intended for the construction of a battery factory in Heide. The project was supposed to enable the production of up to one million electric cars, but the company’s insolvency is causing the plight to grow even worse. (handelsblatt: 13.08.25).
Government aid exacerbates the misery
Northvolt is currently undergoing restructuring. This makes it clear that the aid granted is unlikely to be repaid. The federal government and the state of Schleswig-Holstein had provided €600 million in convertible bonds. This sum is now also at risk. In addition, a loan guarantee from 2020 is placing a strain on public finances.
At that time, the grand coalition of the CDU/CSU and SPD assumed a guarantee for bank loans amounting to US$525 million. An expert advisor from the Ministry of Economics confirmed in the Economic Committee that the risk exposure currently stands at “US$376 million plus financing costs.” This detail is contained in the confidential minutes of December 4, 2024, which are marked “for official use only.”
Habeck confirmed the extent of the crisis
The then Federal Minister for Economic Affairs, Robert Habeck, also spoke at the meeting. He made it clear that the burden could increase significantly. In case of doubt, “this money is up in smoke.” This further exacerbated the plight of taxpayers. The risks amount to almost one billion euros.
Whether anything has changed in this situation remains unclear. A spokeswoman for the Ministry of Economics declined to give any concrete assessment. She merely stated that “no information on specific risk positions can be provided at this time.”
Hope through possible US entry
At the same time, talks are underway regarding a takeover by US battery manufacturer Lyten. The company is also interested in the Heide site. This could mean that the factory construction project might still go ahead after all.
It is unclear whether Lyten will take on the existing commitments. One thing is certain, however: without quick decisions, the crisis will continue. Taxpayers are facing a financial disaster of historic proportions.