Northvolt’s new chair urges Europe to follow US lead on battery subsidies

Europe’s biggest battery sector hope has named as its next chair one of the region’s leading industrialists, who called on the continent to replicate US subsidies and incentives for green technology to ensure the success of its homegrown companies.

Jim Hagemann Snabe, chair of Siemens and former chief executive of software company SAP, will lead the board of Northvolt, the Swedish start-up with more than $55bn of orders from customers such as BMW, Volkswagen, and Volvo Cars.

Snabe told the Financial Times that Europe would have to copy the US approach in which the administration of Joe Biden passed the Inflation Reduction Act in August, offering extensive subsidies to a range of industrial companies, including in batteries. The act has caused considerable angst among European policymakers, including French president Emmanuel Macron.

“For me there is no doubt that Europe needs to succeed in this area,” Snabe said. “The IRA is a good strategy for the US. I’m pretty convinced that Europe will need to do something similar. The concern is that it will reduce globalisation. I think what we will see is a more regional future.”

Northvolt, founded in 2017 in Sweden, has become Europe’s leading company in an industry dominated by Asian rivals such as Japan’s Panasonic and China’s CATL. Its first gigafactory, which uses only green energy, was opened just below the Arctic in northern Sweden late last year, and the company is aiming to recycle and reuse as much of the raw materials found in batteries as possible.

“I was inspired by the vision: Northvolt is the only company that takes the radical approach of a zero carbon footprint and as little waste as possible,” said Snabe.

The Dane recently stepped down as chair of Maersk, the Danish container shipping giant, and together with his role at Siemens has focused heavily on sustainability and pushing companies to decarbonise their “entire value chains”.

Snabe said he still believed in globalisation but added: “Some critical infrastructure like batteries, there will be a need to think about self-sufficient structures in Europe, the US and Asia. Europe needs its own battery production companies and a green one at that.”

Northvolt is considering whether to build its next factory — after two in Sweden, including one it owns jointly with Volvo — in Germany or the US. Chief executive Peter Carlsson told the FT in September that the Inflation Reduction Act was “moving momentum a lot from Europe to the US” with not just Northvolt but also Asian battery companies thinking of moving investments.

Snabe said Northvolt had “succeeded at the most difficult tasks so far”, such as starting up and winning lots of contracts, but that he had been brought on board to help execute its plans.

“Now it’s all about scale. We have the blueprint. Now we have to scale to get to the €50bn [in orders] and more.”

Northvolt’s current chair, co-founder Carl-Erik Lagercrantz, will become vice-chair while the board will also be strengthened by Barbara Frei-Spreiter, an executive at French industrial group Schneider Electric.