Northvolt Secures $14 Billion Battery Order from Volkswagen

Northvolt, a Swedish battery manufacturer, has finalized a substantial $14 billion battery supply agreement with Volkswagen, extending over the next decade. This follows a $1 billion funding round secured in 2019, spearheaded by investors including Goldman Sachs and Volkswagen.

Addressing Volkswagen’s EV Battery Needs

This significant order resolves uncertainties regarding Volkswagen’s battery sourcing strategy as the automaker accelerates its transition to electric vehicles. Volkswagen aims to achieve an annual production capacity of 1.5 million electric vehicles by 2025.

Strategic Partnership and Increased Ownership

The agreement designates Northvolt as a primary supplier of battery cells for the Volkswagen Group within Europe. Furthermore, Volkswagen will increase its equity stake in Northvolt as part of this collaborative venture.

Expansion and Joint Venture Restructuring

As stipulated in the partnership, Northvolt’s gigafactory located in Sweden will undergo expansion. Additionally, Northvolt will transfer its share in the joint venture facility in Salzgitter, Germany, to Volkswagen, supporting the automaker’s expansion of battery production capabilities across Europe.

Total Contract Value Reaches $27 Billion

With this latest deal, Northvolt’s total contracted value now amounts to $27 billion within the past two years, since its initial $1 billion investment.

Northvolt CEO Statement

“Volkswagen is a crucial investor, customer, and partner as we move forward,” stated Peter Carlsson, co-founder and CEO of Northvolt. “We are dedicated to providing them with the most environmentally friendly battery available as they rapidly increase their electric vehicle fleet.”

Diverse Partnerships

Northvolt’s network of partners and customers extends beyond Volkswagen, encompassing prominent European companies such as ABB, BMW Group, Scania, Siemens, Vattenfall, and Vestas. These represent some of the continent’s leading manufacturers.

Capacity and Expansion

In 2019, Northvolt projected a cell manufacturing capacity of 16 gigawatt hours, with $13 billion in sales secured through 2030. The Volkswagen agreement will consume a considerable portion of this expanded production capacity.

Challenging Asian Battery Dominance

Founded by Peter Carlsson, formerly of Tesla, Northvolt was established to enable the European Union to directly compete with Asia’s dominant battery manufacturers – Samsung, LG Chem, and CATL.

Long-Term Capacity Goals

Carlsson previously indicated that Northvolt would require a capacity of up to 150 gigawatt hours to meet projected electric vehicle sales targets for 2030.

Swedish Facility Production

The Swedish plant is anticipated to achieve a production capacity of at least 32 gigawatt hours, bolstered by investments from Swedish pension funds AMF and Folksam, alongside the IMAS Foundation (linked to Ikea), as well as Volkswagen and Goldman Sachs.

Recent Acquisition of Cuberg

Northvolt has been actively expanding its capabilities. In March, the company announced the acquisition of Cuberg, a Silicon Valley-based startup.

Expanding into the U.S. Market

This acquisition provided Northvolt with a presence in the U.S. market and established an advanced technology center.

Lithium Metal Battery Technology

The Cuberg acquisition also grants Northvolt access to cutting-edge battery chemistry, specifically lithium metal batteries, which are considered a promising advancement in the industry.