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Northvolt’s green battery mission backed by further $2.75 billion

Written by Theo Koenig – June 10, 2021

Reviewed by Asaf Kedem

Batteries have emerged as a key component in the electric vehicle (EV) revolution. Until now most of the world’s battery factories and battery technologies have taken place in Asia, with giants such as CATL playing huge roles in the sector. The latest trend, however, has Europe paving the way for massive expansion of battery production. Swedish manufacturer Northvolt is leading the charge, announcing today a $2.75 billion round of funding.

News of Northvolt’s funding comes just as plans to create a new gigafactory with Volkswagen AG were scrapped in what seemed to be a rift in the partnership. In reality the Volkswagen Group have deepened their relationship with Northvolt by contributing $620 million to the latest financing round. This comes after Volkswagen announced a $14 billion order for batteries from the Swedish manufacturer.

The latest round in funding, backed by other partners such as Goldman Sachs, aims at ramping-up capacity of the Northvolt Ett gigafactory from 40GWh to 60GWh with large-scale production set to begin later this year. Funding will also be allocated towards establishing recycling capabilities, with Northvolt aiming to source 50% of its raw material requirements from recycled batteries from 2030.

Northvolt CEO and co-founder Peter Carlsson, previously CPO at Tesla Inc., hopes the latest round of funding will secure the company’s mission to create the “world’s greenest battery”. The Stockholm-based manufacturer has now secured $6.5 billion in funding overall and have to date secured $27 billion worth of contracts from clients that include BMW, Scania, and Volkswagen. By 2030 the company hopes to reach annual production capacities of 150GWh. In order to meet this capacity, the company anticipates having to build at least two more gigafactories in Europe.

Auto Trendy’s Take:

Creating a European value chain for battery manufacturing goes far beyond just building gigafactories. Despite their highly publicized announcements (notably Tesla’s Giga Berlin), gigafactories are the product of a lot of work behind the scenes that includes sourcing and processing raw materials, manufacturing of appropriate equipment, massive R&D costs, and sometimes even the establishment of a recycling infrastructure. It is an industry of its own, and one in which China have a decade more of experience than their European competition. While Northvolt aims to reach annual production levels of 150GWh by 2030, CATL aims to hit nearly 500GWh by 2025. Northvolt’s emphasis on sustainable production will certainly give it an edge in the years to come over its Chinese rivals, however. Meanwhile automakers will be pleased to know that the battery market is diversifying in other areas beyond China, thereby avoiding the complications of an overreliance on one region.

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