German Chancellor Olaf Scholz hailed the importance of electric cars at a groundbreaking ceremony for a factory to make batteries for the vehicles.

Battery cell manufacturer Northvolt says factory in the northern state of Schleswig Holstein will be able to produce power units for a million cars each year.

The Swedish company aims to invest €4.5 billion ($4.9 billion) in the plant near the town of Heide. Production is set to start in 2026 and the projected is expected to generate some 3,000 jobs.

The project is being seen as part of the model for the German government's energy and transport transition.

Northvolt has emphasized that the coastal location in northern Germany near the border to Denmark means the factory is ideally placed to use locally produced offshore wind power. 

What the chancellor said

Scholz welcomed the start of building the Northvolt 3 plant 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 told the gathering, which also included Economy Minister Robert Habeck.

"This is how we secure our technological sovereignty. This is how we secure value creation in Europe," Scholz added.

What the company said

Northvolt CEO Peter Carlsson said soaring energy prices, higher interest rates and increased raw material costs had thrown up "bumps in the road" for the industry.

"We're seeing today some clouds in 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," Carlsson told those present for the ceremony.

"The fact that we are going to go from [internal] combustion to electric is without a doubt going to happen."

"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 added.

rc/msh (dpa, Reuters)

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