Norway battery group rejects factory fears despite Brexit tariffs
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Norway’s leading battery start-up has played down suggestions that an obscure clause in the Brexit agreement between the UK and EU could scupper the entire industry in the Nordic country.
Norwegian policymakers, from the main employers’ association to the central bank and ministers, have sounded the alarm about the future of the battery industry in Norway after discovering that any cars built in the EU containing Norwegian batteries would face tariffs of 10 per cent to enter the UK from 2027 and vice versa.
However, Tom Jensen, the chief executive of Freyr Battery, which is listed in New York via a special purpose acquisition company, told the Financial Times that it was committed to its plans to build five gigafactories in northern Norway with the first due to produce batteries from next year.
“It has not caused us to change our plans whatsoever,” said Jensen, a former aluminium executive. “But it doesn’t mean we’re not paying attention to it. We are supporting the [Norwegian] government in dealing with a potential problem. We are very confident reason will prevail.”
Iselin Nybo, Norway’s minister of trade and industry, said the country has “initiated dialogue with the European Commission and the UK in an attempt to find solutions to the issue”.
Norway has high hopes for its battery industry as it hopes to use its extensive renewable energy from hydroelectric power to attract green business to rival neighbouring Sweden, which is home to Europe’s largest battery start-up, the Volkswagen-backed Northvolt.
Ole Erik Almlid, head of the Confederation of Norwegian Enterprise, warned earlier this year that the Brexit-related tariffs could spell the end of the battery industry in Norway and cost thousands of potential jobs. “Norway misread the situation. They did not pay enough attention to the Brexit negotiations,” said a European diplomat.
Another noted that the UK had outlined its support for Norway but that to get rid of the tariffs would require the revision of the Brexit agreement, which is regarded as an impossibility by both the EU and UK.
Freyr plans to spend almost $2bn by 2025 to build four factories in Norway and one it announced as likely to be in Finland, before another $2bn by 2028 to build a further three gigafactories.
It is dependent on the little-used but potentially more efficient semi-solid battery technology from 24M, a spin off from the Massachusetts Institute of Technology.
Jensen said the first two Freyr gigafactories — to be built in Mo i Rana, just south of the Arctic Circle — would be used for energy storage rather than electric vehicles.
He added that Freyr, which raised $600m from investors earlier this year as part of its acquisition by a Spac and listing in New York, was “doubling down” on its investment in Norway as it hoped to leverage its hydropower electricity to make the greenest and cheapest batteries of any producer.
Norway’s central bank noted in its June monetary policy report that four companies were planning battery factories with investments of about NKr80bn ($9bn) by 2026. But it warned that Brexit could affect investment decisions for three of the planned factories so it was assuming that one of them would not be built.
Freyr, whose shareholders include Koch Industries and commodity giant Glencore as well as institutional investors Fidelity and Franklin Templeton, is aiming to have 43 gigawatt hours of battery production capacity by 2025 and 100-150GWh by 2030. Sweden’s Northvolt is aiming for at least 150GWh by the end of the decade and has announced partnerships with VW and Volvo.