Northvolt AB joined European companies putting policy makers on notice about the allure of US green tech incentives, calling tax credits tucked in President Joe Biden’s Inflation Reduction Act impossible to ignore.
The comments echo those of CEOs from Siemens Energy AG and Volvo AB, who last week lauded the US subsidy framework—which includes roughly $500 billion in new spending and benefits—for having a clear 10-year funding window for tax breaks that can be implemented immediately. Companies have largely bristled at the EU plan, which is based on a cumbersome application process and draws on money that was already pledged through various green transition programs.
“Unfortunately, concrete measures for greater competitiveness are still a long way off,” said the BDI, Germany’s biggest industry association. “Attractive framework conditions for business and investment are the be-all and end-all. Companies need more speed and less detailed regulation.” The IRA supports companies scaling up a range of technologies—solar, wind, hydrogen—by providing funding for critical raw materials as well as financing for operating expenditures. The law makes funding available at a fixed amount per product, reducing the risk of expanding production. And by offering funds in the form of tax breaks, they become available immediately.
“More projects are now up for debate in the United States,” Bruch said. “A couple of months ago, the situation was reverse; there were more projects underway in Europe.”“If nothing happens in Europe, we will have to think about where we’re going to put the initial investments to scale up capacity for some of the technologies in the value chain,” Volvo CEO Martin Lundstedt said in an interview this month.
Northvolt sees demand for electric vehicles “moving rapidly upward” in North America, and supply chains—including makers of cells, electrodes and separators—also are shifting to the US. While the company hasn’t committed to building a plant in the US yet, it’s hinted that it may postpone a factory in Germany in favor of one in North America. With the current incentive imbalance, “it is basically impossible to operate in the North American market from anywhere else,” Carlsson said.