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Opposition raises doubts over Northvolt initiative

Critics Zero in on Detailed Advocacy for Northvolt Support

Site for proposed Northvolt battery factory in Heide under construction (Archival photo)
Site for proposed Northvolt battery factory in Heide under construction (Archival photo)

Controversy over Northvolt Battery Factory Support: German Gov't Under the Microscope by SPD

Critics scrutinize a thorough probe into the appointments at Northvolt's upper echelons. - Opposition raises doubts over Northvolt initiative

The German SPD party is raking the state government over the coals for their handling of the planned Northvolt battery factory near Heide, a mammoth project worth billions. Kianusch Stender, an economist for the German Press Agency, expressed concern, stating, "With a billion-dollar project like Northvolt, speed shouldn't be prioritized over caution."

economy minister Claus Ruhe Madsen (CDU) refutes the accusations and points to the commissioned study by PwC, investigating opportunities, risks, and convertible bond default probability. The state, as surety for half of the bond, collaborated with this review, and also conducted its own assessments.

"Through rigorous consideration, the state government determined that the project's potential benefits outweighed the risks, leading them to propose agreement to the surety for the convertible bond," said Madsen. Despite intense deliberation, spanning over 30 meetings, the project eventually received the green light on January 25, 2024.

SPD's Criticism

The opposition's criticism stems from documents released by the state government in May 2023 concerning PwC's study. Leaked correspondence within the state government suggests a desire for expedited answers from the affected ministries, indicating a sense of urgency that wasn't merely surface-level enthusiasm.

In an email from the Economy Ministry on May 15, 2023, it says, among other things: "...and the tight time frame needs to be clarified more specifically, which doesn't mean uncritically pushing it through, as we're instead 'chasing after information.'"

In another email on the same day, the author or authors write: "In the end, only current risks and information gaps can be documented, and it remains a decision for the department heads or the HH legislature (the budget legislature). Unless the next few days bring revelations that make the risk manageable."

Northvolt's Financial Struggles

Northvolt aims to generate battery cells for up to a million electric vehicles annually near Heide but has faced financial difficulties. In November 2024, the company filed for bankruptcy protection in the US, and in March 2025, it filed for insolvency in Sweden. These circumstances could prove costly for the federal government and the state of Schleswig-Holstein as both have guaranteed approximately €600 million to Northvolt through KfW, with the guarantee divided equally between the two parties.

The ongoing investigation, initiated by the SPD and FDP, revolves around whether the state government kept the Kiel parliament in the dark about Northvolt's risks before taking on its guarantee.

  • Northvolt
  • SPD
  • Due Diligence
  • State Government
  • Financial Crisis
  • PwC
  • Negligence
  • BMWi
  • Billion-euro project
  • German Press Agency
  • CDU

Additional Insights

The crisis surrounding Northvolt's bankruptcy is significant, involving substantial losses for investors, including Swedish national pension buffer funds and major international stakeholders like Volkswagen[1][4][5]. These pension funds have endured criticism due to their joint failed investment in Northvolt[1].

Investigative journalism, depicted in SVT's program "Uppdrag Granskning," has unveiled possibly inadequate due diligence and raised questions about Northvolt's integrity[4]. Anonymous worker testimonies highlighted operational dysfunctions during production, while revelations suggested that Northvolt produced very limited quantities of battery cells using materials sourced externally, contrasting promises of a fully integrated, 100% Swedish production chain[4].

Political and economic pressures may have driven the rapid approval and financing of the Northvolt project to align with Sweden’s green industrial ambitions[5]. There are reports that skeptic voices voicing concerns about the technology's industrial viability and the substantial electricity requirements were overshadowed by political and media enthusiasm for green transition projects[5]. Given these circumstances, the state's haste and enthusiasm have sparked questions about the thoroughness of financial and operational due diligence[5].

  1. The SPD party is criticizing the state government for potentially prioritizing speed over caution in their handling of the Northvolt battery factory project, as evidenced by Leaked correspondence within the state government indicating a sense of urgency and a tight time frame, which could potentially imply negligence in due diligence.
  2. Despite the billion-dollar project's potential benefits, questions remain about the rigorousness of the financial and operational due diligence conducted by the state government and commissioned study by PwC, especially in light of the Northvolt company's financial struggles, including filing for bankruptcy protection in the US and insolvency in Sweden.
  3. Given Northvolt's financial crisis and the substantial losses for investors such as Swedish national pension buffer funds and Volkswagen, investigative journalism has raised concerns about inadequate due diligence and Northvolt's integrity, highlighting operational dysfunctions during production and limited quantities of battery cells produced using materials sourced externally, contrasting promises of a fully integrated, 100% Swedish production chain. These circumstances have sparked questions about the state's haste and enthusiasm and the thoroughness of financial and operational due diligence.

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