Northvolt Secures $2.75B Funding for European Battery Production

Northvolt Secures $2.75 Billion to Expand European Battery Production

Northvolt AB, a Swedish developer and manufacturer of batteries, has successfully raised $2.75 billion in funding. This capital injection is intended to facilitate the company’s expansion towards an annual production capacity of 150 GWh within Europe by the year 2030.

Details of the Funding Round

This funding round represents the largest to date for Northvolt. It was jointly led by current investors Goldman Sachs and Volkswagen, alongside new investors. These include Swedish pension funds AP1-4 and OMERS, a significant Canadian pension plan.

Additional participants in this investment include 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.

Volkswagen's Continued Support

Volkswagen contributed €500 million ($620 million) to the funding, reaffirming its 20% ownership stake in the battery manufacturer. This investment underscores the OEM’s commitment to securing its battery supply chain.

Reports indicate that Northvolt’s current valuation is approximately $11.75 billion. However, the company has chosen not to confirm this specific figure.

Significant Contracts and Customer Base

Northvolt has already established substantial agreements with leading automotive manufacturers, including Volkswagen and BMW. A $2.3 billion contract with BMW was signed in July 2020, and a more recent order from Volkswagen, valued at $14 billion over ten years, was secured in March.

These contracts collectively amount to $27 billion in orders for Northvolt. Other key customers include Scania, a Swedish heavy-duty truck producer, and Fluence, an energy storage solutions provider.

Total Funding and Gigafactory Expansion

With this latest round, Northvolt’s total funding since its founding in 2016 exceeds $6.5 billion. The company’s initial gigafactory, located in Skellefteå, Sweden, will be expanded from a capacity of 40 GWh to 60 GWh. This expansion is partially driven by the increased demand resulting from the Volkswagen order.

Production at the Skellefteå facility is scheduled to begin later in 2021.

Future Expansion Plans

Northvolt’s long-term objective is to achieve an annual battery production capacity of at least 150 GWh across Europe by 2030. To accomplish this ambitious goal, the company is evaluating the potential construction of at least two additional gigafactories, with Germany being considered as a possible location.

Contribution to European Green Deal

As one of Europe’s largest battery manufacturers, Northvolt is considered crucial to the success of the European Green Deal. EIT InnoEnergy, a Northvolt shareholder, emphasized the funding’s importance in establishing a robust European battery value chain.

Sustainable Manufacturing Practices

Northvolt differentiates itself through its commitment to sustainable battery production. The company utilizes renewable energy sources throughout its manufacturing processes, resulting in an 80% reduction in carbon footprint compared to batteries produced using coal power.

Furthermore, Northvolt incorporates in-house battery recycling and reuses recovered raw materials in its production cycle.