Northvolt completes funding for first homegrown gigafactory

Volkswagen Group, together with funds managed by the Merchant Banking Division of the Goldman Sachs Group, will lead the USD 1 billion equity fund raising alongside BMW Group, AMF, Folksam Group and IMAS Foundation. The transaction is subject to approval from the Swedish Competition Authority. At the same time, the company announces – in cooperation with the Volkswagen Group – plans to establish a second gigafactory with an intended location in Lower Saxony, Germany. “Today is not only a great milestone for Northvolt, it also marks a key moment for Europe that clearly shows that we are ready to compete in the coming wave of electrification, and that we will do so using battery cells which carry the lowest CO2 footprint possible,” says Peter Carlsson, co-founder and CEO of Northvolt, in a press release. As previously reported, the European Investment Bank has approved in-principle a USD 400 million (EUR 350 million) loan as a part of the total funding for Northvolt Ett. Together with additional debt being raised, the establishment of the initial 16 GWh of lithium-ion battery cell manufacturing capacity at Northvolt Ett is enabled. Building construction work will start in August with large-scale production expected to begin in 2021. Northvolt Ett will be Northvolt’s primary production site, hosting active material preparation, cell assembly, recycling and auxiliaries. The gigafactory will in the future be expanded to at least 32 GWh. “With these world-class financial and industrial partners coming together and getting behind our mission, we see a tremendous opportunity and momentum for further capacity expansion and product innovation over the coming years. This is only the beginning,” adds Peter Carlsson. In addition to the gigafactory in Sweden, Volkswagen and Northvolt plan to set up a 50/50 joint venture to establish a 16 GWh battery cell factory with an intended location in Salzgitter, Lower Saxony, Germany. Volkswagen is investing around USD 1 billion (EUR 900 million) in joint battery activities with Northvolt. A part of the amount is intended for the joint venture, another part of the total amount will be invested directly in Northvolt. The production facility is scheduled to start manufacturing battery cells for Volkswagen from late 2023 or early 2024 and could be increased to 24 GWh over the following years. Over recent few years, Europe has witnessed remarkable growth in demand for domestic cell capacity driven by the industrial transition towards electrification. After entering a number of supply agreements, a significant share of the production volumes from Northvolt Ett has been sold to key customers, amounting to a combined order value of over USD 13 billion through 2030, the press release continues.