Swedish battery maker run by ex-Tesla engineer raises $2.7bn to expand gigafactory

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Northvolt Ett gigafactory in Skellefteå, Sweden. Photo: Northvolt
Northvolt Ett gigafactory in Skellefteå, Sweden. Photo: Northvolt

Swedish battery start-up Northvolt has raised $2.75bn (£1.9bn) to expand capacity at the factory it is building in northern Sweden as demand for electric cars increases.

The company will expand its first gigafactory in the country to 60 gigawatt-hours a year from 40 GWh – enough to supply batteries for 1 million cars. 

"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," said Peter Carlsson, co-founder and CEO of Northvolt. 

Carlsson, who previously worked at Tesla (TSLA), added: "We have a solid base of world-class investors and customers onboard who share Northvolt’s mission of building the world’s greenest battery to enable the European transition to renewable energy."

The Lithium-ion battery maker raised the equity from investors including Volkswagen (VOW.DE) and US investment bank Goldman Sachs (GS). 

The private placement – one of the biggest in Europe – brings the total capital in equity and debt raised by Northvolt to $6.5bn, the company said. The latest fundraising for the company, founded in 2016, values Northvolt at about $12bn. 

It has so far secured more than $27bn worth of contracts from customers such as BMW, Fluence, Scania and Volkswagen, which are making the push to electric. 

Production on the new factory is expected to commence at the end of this year. It will be the first battery factory to be built in the EU by a European firm. 

Read more: UK motorways get 1,800 new car charging points in £300m green investment

There has been rising demand for battery gigafactories and battery makers have been scrambling to keep up as drivers look for greener cars and global governments vow to cut emissions in the race to meet net-zero goals. 

Global sales of electric vehicles are expected to rise by about 70% in 2021, after reaching nearly 2.5 million in 2020, according to IHS Markit forecasts.

The company expects to build at least two more gigafactories in the continent over the coming 10 years and says it is "actively exploring the opportunity" to build the next of these in Germany to meet its 2030 capacity target. 

Northvolt also anticipates "tremendous growth" in other parts of the European value chain for battery manufacturing. This includes the processing of raw materials to component, equipment manufacturing, production of battery cells and systems and the build-up of recycling infrastructure.

"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," said Alexander Hartman, CFO of Northvolt.

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