The European Commission on Monday approved Germany’s plans to grant 902 million euros in state aid to support Swedish group Northvolt to build an electric car battery factory in Germany, a project that, without subsidies, risks being moved to USA, informs AFP.

“This is the first state aid authorized by Brussels within a mechanism created by the EU in March 2023, with the idea of avoiding the diversion of European investment projects to the US,” said the European Commissioner for Competition, Margrethe Vestager.

According to the EU executive, the aid granted to the Swedish group Northvolt will take the form of a subsidy worth 700 million euros, to which a guarantee of 202 million euros will be added. “Without this aid, Northvolt would have built this plant in the USA, where it was offered aid, especially under the Inflation Reduction Act plan,” the European Commission points out, according to Agerpres.

Swedish group Northvolt announced in May 2023 that it plans to build a battery factory for electric cars in Heide (northern Germany), after securing a promise of financial support from Berlin. This plant, Northvolt’s first plant outside of Sweden, would have an annual capacity of 60 GWh, which would allow it to equip between 800,000 and one million electric vehicles with batteries per year. Production would begin in 2026 and the facility will reach full capacity in 2029.

Northvolt is one of Europe’s main hopes for batteries for electric cars, at a time when the old continent is trying to recover some of its lag in this production indispensable for the transition of the car industry.

In response to US and Chinese subsidies, which have generated fears of a flight of investment out of Europe, the European Commission adopted in March 2023 a text that facilitates the granting of state aid to projects that contribute to the reduction of CO2 emissions in European union.