Europe's Industrial Nightmares Are Coming True
From batteries to EVs, giga-subsidies are turning sour. It’s time for a re-think.
Swedish truck maker Scania is ramping up production of electric rigs now that previously delayed batteries from Northvolt AB have begun arriving in greater numbers.
Photographer: Bloomberg/BloombergAre the wheels coming off Europe’s bid to catch up to China and the US in critical industries? Swedish electric-vehicle battery maker Northvolt AB is cutting jobs and selling assets amid slowing demand, just months after securing €912 million ($1 billion) in subsidies to build a plant in Germany rather than the US state of Nebraska. Meanwhile, a planned Intel Corp. chip factory in Germany that was awarded €10 billion in subsidies has been delayed after the company decided to cut costs.
These investments were supposed to be geopolitical weapons to protect valuable supply chains and help achieve climate targets. They’re now looking more like political hot potatoes, with Sweden ruling out a rescue of Northvolt and German politicians demanding Intel’s subsidies be withdrawn or allocated elsewhere. They also seem to be confirming the deeper fears of skeptics, after France and Germany accounted for over €500 billion in approved state aid in 2022. Gobs of government cash haven’t been able to rouse Europe from its industrial nightmare: The scars of the Ukraine war and US-China competition are still battering energy-intensive sectors like chemicals, squeezing carmakers like Volkswagen AG and threatening jobs. “Europe has no industrial policy,” Luca de Meo, the boss of carmaker Renault SA told French magazine L’Express.