VW-backed Northvolt raises €2.27B to build the world’s greenest battery; here’s how

Stockholm-based Northvolt is a lithium-ion battery manufacturing company that focuses on providing eco-friendly batteries. It provides electrification and renewable energy storage designed for lithium-ion battery plants to produce batteries for electric vehicles. The company is on a mission to deliver batteries with an 80 per cent lower carbon footprint compared to those made using coal energy.

Northvolt raises funds

In a recent development, Northvolt announced the signing of a $2.75B (approx €2.27B) private placement to finance. A private placement is a sale of stock shares or bonds to pre-selected investors and institutions rather than on the open market. Including this round, the company has now raised over $6.5B (approx €5.37B) in equity and debt, to date.

Peter Carlsson, co-founder & CEO of Northvolt, says, “We have a solid base of world-class investors and customers on-board who share Northvolt’s mission of building the world’s greenest battery to enable the European transition to renewable energy.”

Investors in this round

The round was co-led by new investors AP funds 1-4, via the co-owned company, 4 to 1 Investments; and OMERS, Ontario Municipal Employees Retirement System is a Canadian pension fund.

Existing investors Goldman Sachs Asset Management and Volkswagen Group also invested in this round. In addition, also participating in the equity raise are current owners AMF, ATP, Baillie Gifford, Baron Capital Group, Bridford Investments Limited, Compagnia di San Paolo through Fondaco Growth, Cristina Stenbeck, Daniel Ek, IMAS Foundation, EIT InnoEnergy, Norrsken VC, PCS Holding, Scania and Stena Metall Finans.

Goldman Sachs Bank Europe SE and Morgan Stanley & Co. International plc acted as financial advisors to Northvolt.

“Green batteries for a blue planet”

Founded in 2016 by Paolo Cerruti and Peter Carlsson, Northvolt is a European supplier of sustainable, high-quality battery cells and systems. It offers lithium-ion cells based around proprietary Lingonberry NMC chemistry available in cylindrical and prismatic formats.

Northvolt’s product is an environment-friendly battery manufactured with minimal carbon footprint and with recycling technology without compromising with important eco-systems, enabling the auto industry to replace fossil fuels with electricity in an efficient manner. It aims to establish a supply of sustainable battery cells and systems.

According to the company, in order to enable the European transition to a decarbonised future, it has made swift progress on its mission to deliver the world’s greenest lithium-ion battery with a minimal CO2 footprint. Northvolt has grown to more than 800 people from over 70 different nationalities at its facilities in Sweden, Germany, and Poland. 

Among Northvolt’s industrial partners and customers are ABB, BMW Group, Scania, Siemens, Vattenfall, Vestas and the Volkswagen Group.

Capital utilisation

The raised capital will help the company to further increase the battery cell production capacity and R&D efforts in order to meet the increasing demand of customers engaged in the transition to decarbonised, electric solutions.

The funds will also enable Northvolt in its expansion plan leading up to and beyond 150 GWh of deployed annual production capacity in Europe by 2030. 

In addition, Northvolt has to date secured in excess of $27B worth of contracts from key customers, including BMW, Fluence, Scania and Volkswagen, to support its plan, which also includes establishing recycling capabilities to enable 50 per cent of all its raw material requirements to be sourced from recycled batteries by 2030.

Future plans for Europe

Northvolt’s first gigafactory, Northvolt Ett, in Skellefteå, Sweden, will be expanded from the earlier plan of 40 GWh to 60 GWh of annual production capacity in order to meet the increased demand from key customers, including a $14B order from Volkswagen announced earlier this year. The factory will commence production later this year.

Co-founder & CEO of Northvolt, Peter Carlsson says, “We have been producing cells at our cell industrialisation facility, Northvolt Labs, for more than a year and are excited to now bring the knowledge and technology we have developed to the north and start large-scale production.”

To achieve its 2030 capacity target, the company currently expects to build at least two more gigafactories in Europe over the coming decade, and is actively exploring the opportunity of building the next of these in Germany. During the same timeframe, Northvolt foresees tremendous growth in other parts of the European value chain for battery manufacturing; from processing of raw materials to component and equipment manufacturing, to production of battery cells and systems and the build-up of recycling infrastructure.

Alexander Hartman, CFO of Northvolt says, “This is a new European industry in the making and it will require significant investments over the coming decade. It is encouraging to see that the investor community has identified the opportunity early, and we hope to see more investments throughout the value chain over the coming years.”