Northvolt joined European companies putting policy makers on notice about the allure of U.S. green tech incentives, calling tax credits tucked in President Joe Biden’s Inflation Reduction Act (IRA) impossible to ignore.
The supplier of batteries to Volkswagen Group and BMW highlighted the tax credits included in the law that cover about 30 percent of cell manufacturers’ operating costs.
If the Swedish startup producing batteries in its home country were to start work now on building a similar-size factory in North America, it would be in line for about $8 billion of tax credits by the end of the decade.
“It is clearly driving the investments now at a very rapid pace,” Northvolt CEO Peter Carlsson said of the IRA in an interview with Bloomberg Television.
“Unfortunately, there is a risk that these investments are a little bit taking the momentum out of Europe.”
The comments echo those of CEOs from Siemens Energy and Volvo AB, the truckmaker, who last week lauded the U.S. 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.
As the contours of Biden’s IRA sharpen, EU leaders have done little to soothe industry’s concerns.
At a closely watched summit in Brussels last week, leaders dialed down earlier rhetoric on plans to loosen state-aid rules because it would disadvantage smaller EU states with smaller budgets. Instead, the bloc pledged to focus on improving its own policies to make European companies more competitive with the U.S. and China.
It will be weeks, if not months, before details of any new EU measures emerge, and then national governments will need to draw up rules for implementing them.