Northvolt secures $1bn for battery gigafactory in Sweden

Sweden, June 13, 2019: Northvolt, the company founded by Swedish entrepreneur Peter Carlsson to establish a lithium-ion battery cell gigafactory factory in his home country, says it has secured $1 billion in equity funding for the project, to bring the goal a step nearer.

Northvolt said a consortium of investors led by Volkswagen Group and Goldman Sachs’ merchant banking division – and including BMW Group, Swedish insurer Folksam Group and the Ikea-linked IMAS Foundation – raised the funds. The European Investment Bank had earlier approved a $400 million loan for a 16 GWh lithium-ion battery manufacturing site in Sweden. Northvolt said it has already entered several supply agreements with a combined order value of more than $13 billion through 2030.

In addition to the Swedish gigafactory, Volkswagen and Northvolt are planning a 50/50 joint venture to establish another 16 GWh battery cell factory, with Salzgitter in Lower Saxony, Germany, the favored location. To that end, Volkswagen is investing around $1 billion alongside its partner. The companies anticipate commercial production of battery cells will start by late 2023 or early 2024.

The EU launched a battery alliance to elevate European manufacturers to lead the global market. The potential is tremendous, as the European Commission predicted “covering the EU demand alone requires at least 10-20 gigafactories”. In so doing, the continent could capture a market worth around €250 billion ($282 billion) per year from 2025.