Sweden’s Northvolt raises $2.75bn to boost battery output

Swedish battery start-up Northvolt has raised $2.75bn from investors including Volkswagen and Goldman Sachs, as it looks to expand production to meet Europe’s demand for electric cars.

The fundraising values the company, which was founded in 2016, at about $12bn and will help it expand capacity at the factory it is building in remote northern Sweden to 60 gigawatt-hours a year from 40 GWh — enough to supply batteries for 1m cars.

Northvolt’s battery factory, the first to be built in the EU by a European company, is due to start production at the end of this year. The company is aiming to produce “the world’s greenest batteries” by using renewable energy and recycled raw materials.

The private placement was co-led by Swedish pension funds AP1, AP2, AP3, AP4 and Canadian pension plan Omers Capital Markets, alongside existing investors Volkswagen and Goldman Sachs, Northvolt said. Smaller existing investors such as Baillie Gifford also participated.

VW, which this year signed a $14bn battery order with Northvolt, said it had invested $620m in the fundraising. The German carmaker said its 20 per cent stake in Northvolt remained at the same level.

“With this investment, we are strengthening our strategic partnership with Northvolt as a supplier of sustainable battery cells which are produced using renewable energy and are comprehensively recyclable,” said Arno Antlitz, VW chief financial operator.

Northvolt has raised more than $6.5bn from investors since its founding by former Tesla employees Peter Carlsson and Paolo Cerruti. It aims to reach 150 GWh of battery production capacity in Europe by 2030.

“Our problem is not the demand, our problem is how to manage to execute on all these requests,” Carlsson told the Financial Times.

He said the company was looking to build two more battery “gigafactories” in Europe, including one in Germany and the other possibly in Finland.

Northvolt is not alone in plotting a green revolution from northern Sweden, raising concerns about whether there is enough renewable energy for all the projects. Two separate green steel projects — one of which says it will need a third of Sweden’s current electricity generation — are expected to start up in the next few years.

The country’s power capacity was “so far” not a concern, Carlsson said. “Clearly we are very rapidly going from a very big surplus to a balance or even a deficit over a longer period of time.”

He added that there was “so much going on” in northern Sweden that “the fight for energy and labour will probably be too tough” to base another gigafactory close to Skelleftea, saying “Finland could be interesting”.

Goldman Sachs and Morgan Stanley acted as financial advisers to Northvolt.