Under Fire: Habeck's Northvolt PromotionDraws Criticism from Reiche and Federal Audit Office
Wealthy Figure Criticizes Habeck for Financing Northvolt Project
By year's end, the government will pump a hefty sum into a troubled battery manufacturer called Northvolt. The company's financial troubles have led to insolvency. The Federal Audit Office slams the rushed granting of promotional funds. Even Economics Minister Reiche now joins the chorus of critics.
Robert Habeck, former Economics Minister, is in the hot seat for his handling of state funding for Northvolt. During a parliament interrogation, his successor, Katherina Reiche (CDU), expressed regret over the investment decision, labeling it as "erroneous." She emphasized the need for transparency to secure taxpayer money.
The Federal Audit Office's criticism adds weight to this sentiment, hinting that the government isn't well-suited for entrepreneurial ventures. Media reports suggest the Office accuses Habeck of doling out taxpayer money too carelessly and underestimating economic risks[1].
Throughout the day, Reiche and Habeck attended consultations with the Bundestag's Budget Committee regarding Northvolt. Reports from party circles indicate that Habeck declined to attend the committee[2]. In late last year, Habeck had defended the subsidies for Northvolt, likening Germany's reliance on China for battery production to a staggering 80%[3].
"Wrong and Reckless": Battery Factory in Northern Germany
Northvolt's bankruptcy filing in Sweden in March leaves the factory under construction in Heide, Schleswig-Holstein in limbo. The state-sponsored bank KfW had invested approximately €600 million for the factory's construction, with the federal government and the state each contributing half. Additionally, €20 million was allocated for interest and administrative costs. To top it off, the EU Commission approved direct subsidies valued at around €700 million[4]. However, these funds have yet to be disbursed.
Expert Opinion Delivered to Budget Committee
The Federal Ministry of Economics provided the Budget Committee with an expert opinion from PwC regarding Northvolt. The document, dated June 15, 2023, shows that auditors believed a repayment of the convertible bond, including interest, was "plausible." They also saw high potential for battery cell sales by Northvolt. However, the analysis revealed the company's dependence on external investors to cover its expenses[5].
- Katherina Reiche
- Robert Habeck
- German Bundestag
- Energy Policy
- Battery Cells
[1] ntv.de, lar/dpa[2] Die Welt[3] Spiegel Online[4] Handelsblatt[5] dpa, partially redacted expert opinion from June 15, 2023
- Despite the dire financial situation of Northvolt, a battery manufacturer in EC countries, the German government is still planning to invest a substantial amount, raising questions about the prudence of such decisions, especially given the criticism from Finance Minister Katherina Reiche and the Federal Audit Office regarding the handling of promotional funds.
- The ongoing controversy surrounding Northvolt's state funding, criticized as 'erroneous' by Reiche and labeled as 'wrong and reckless' by the Federal Audit Office, is causing significant debate in Business, Politics, and General-News circles, highlighting the necessity for transparency in delivering aid to prevent potential misuse of public funds.
