BERLIN (Reuters) -The underlying shift towards electric vehicles is continuing despite a recent slowdown in the pace of growth, Northvolt's CEO said while presenting the Swedish battery maker's investment plans for a new plant in Germany on Monday.
The Northvolt 3 battery cell factory in Heide, in the northern state of Schleswig-Holstein, is expected to produce climate-friendly battery cells for 1 million cars a year once completed later this decade, the company has said.
"We're seeing today some clouds on the sky, we are seeing a little bit of a decline of the electric vehicle trend overall, but I think that when you take a step back and look at the transition, the megatrend and the underlying change is there," Northvolt CEO Peter Carlsson said at a groundbreaking ceremony for the new plant.
"The fact that we are going to go from (internal) combustion to electric is without a doubt going to happen," he added.
High energy prices, soaring interest rates and a rise in the cost of raw materials had created "bumps in the road", but the EV industry will continue to grow, the CEO said.
"We're now seeing even stronger products coming out in the market, that will also be produced here at Northvolt 3, that will drive even stronger adoption of electric vehicles," Carlsson said.
Attending the event, German Chancellor Olaf Scholz hailed the factory as a sign of his country's industrial appeal.
"The production of good cars will remain the backbone of our industry beyond the combustion engine. For this we need battery cells made in Germany, made in Europe," Scholz said.
"This is how we secure our technological sovereignty. This is how we secure value creation in Europe," he added.
Cell assembly in the new factory is planned for 2026 and its final expansion is scheduled to be completed in 2029. The investment amounts to 4.5 billion euros ($4.86 billion) and around 3,000 new jobs will be created, Northvolt said.
The EU Commission in January approved state aid for the project. In total, there are subsidies amounting to 902 million euros - 700 million of which are grants and 202 million are guarantees.
($1 = 0.9243 euros)