16 May, 2019

Northvolt raises funds for Europe’s largest battery project

Swedish startup Northvolt has acquired a €350 million loan to build Europe’s biggest battery plant. The new plant will provide European competition for large Asian battery manufacturers.

‘The EIB’s approval is one really key piece of the puzzle in putting together that full funding.’

The factory is planned to produce 32 gigawatt hours of annual battery capacity by 2023 and will compete with Asian rivals including: CATL, Samsung and LG Chem. The plant requires a reported €1.5 billion worth of investment.

The loan has been acquired from the European Investment Bank (EIB) and is the lender’s largest direct financing for battery technology.

‘The EIB’s approval is one really key piece of the puzzle in putting together that full funding,’ Northvolt co-founder Peter Carlsson told Reuters.

Northvolt is also in the final stages of raising funds from fellow Swedish company IKEA.

Last year, IKEA began adding electric vehicle (EV) charging points to all of its German stores. It is believed the company has invested up to €5 million in installing these new charging points and it also is investing in creating an electrified fleet.

VW interest

Elsewhere, Northvolt is drawing interest from Volkswagen (VW), with the German carmaker reportedly turning to the Swedish startup for its battery needs. The partnership is scheduled to start in March 2020 and will signal a leap towards an electrified range from VW.

VW's Supervisory Board agreed earlier this week to build a €1 billion 10GWh cell plant in Germany. VW’s existing plant in Salzgitter has been realigned to produce up to 12 gigawatt hours annually, to be increased to 30 as the carmaker continues its electric expansion.

The foray would strengthen the ties between the two companies as VW’s commercial vehicle brand Scania signed a contract with Northvolt for the supply for battery cells earlier this week.

VW has more than doubled its forecast for the supply of EV battery cells that it will need to become a market leader in the technology. The carmaker has said it will have to source more than 300-gigawatt hours (GWh) of annual supply in 2025, increasing its 2017 prediction for 150GWh capacity for the European and Asian markets.

The prediction takes into account the more stringent CO2 emission targets in the European Union, which will require a reduction in levels of 37.5% by 2030, compared with 2021 results. This has pushed most manufacturers into projects to electrify their line-ups.

The carmaker launched its first dedicated EV, the ID.3, earlier this month.