Northvolt Raises $2.75B from VW and Others to Further Sustainable EV Battery Production

Northvolt AB, a private lithium-ion battery developer, and manufacturer, has raised $2.75 billion, increasing its net investment to $6.5 billion. An anonymous tip said the latest investment round increased the company’s valuation to $11.75 billion, though this information is yet to be confirmed by the company. The sustainable battery producer plans to use the funds to further global advancement as well as to raise productivity.

The funding round, said to be the largest in Northvolt’s history, was hosted by a cluster of big investors including Goldman Sachs Group Inc and Volkswagen Group (VW). The latter invested $609 million and reported that it still has a 20% stake in the company. New investors also came up such as OMERS – Canadian pension provider and Swedish pension funds AP1, AP2, AP3, and AP4. Existing investors Baillie Gifford investment management firm and Spotify’s CEO Daniel Ek also took part in the fund pool.

Northvolt plans to upgrade from 40 gigawatt-hours to 60 gigawatt-hours in its factory based in the far north of Sweden. This will increase their battery supply to about 1 million EV. Production at the factory is scheduled to begin later this year. Northvolt also plans to acquire more renewable energy sources and recycled raw materials to accelerate the production of “the world’s greenest batteries”.

Northvolt and Its Battery Production

The Swedish company says it has signed $27 million worth of deals with firms such as BMW and VW, with the latter having made a $14 billion order. Notably, the company is making “fairly significant shipments”, according to its CEO and co-founder Peter Carlsson. These products have been developed in a smaller factory which has been in operation for over a year.

Carlsson added that the company’s batteries are still being used on test tracks and are yet to be placed in EV currently on the road. Northvolt expects to have functional batteries for energy storage applications by the end of 2022 and batteries for EV as from 2023.

Carlsson, who was once Tesla’s supply chain vice president, stated that Northvolt’s batteries were based on a “different chemistry” to those of Tesla, but their performance was almost similar. He went on to say that the global transition to EV using batteries, such as those from coal-based economies like China, would create a carbon footprint as big as Spain. The use of renewable energy, however, would prevent such an adverse event.

Northvolt’s future projects include building a second plant in Germany following the acquisition of ample renewable energy sources. A more long-term plan is to achieve an annual production capacity of 150 gigawatt-hours in Europe by 2030.