Battery developer Northvolt raises $US1.6 billion for two new gigafactories

Swedish battery manufacturer Northvolt announced on Wednesday that it had signed a $US1.6 billion ($A2.23 billion) round of debt financing intended to support the development two lithium-ion battery gigafactories.

Northvolt launched back in March of 2017 and now employs over 700 people at its facilities in Sweden, Germany, and Poland. To date, the company has raised over $US3 billion ($A4.2 billion) to support the development of its two planned lithium-ion battery gigafactories, Northvolt Ett in Skellefteå, Sweden, and Northvolt Zwei in Salzgitter, Germany.

Northvolt Ett, with a potential annual production output of 40GWh, is currently under construction and is scheduled to begin production in 2021. Northvolt Zwei, meanwhile – a joint venture established alongside Volkswagen Group – is currently in the permitting phase and is currently scheduled to begin operations sometime in 2024 and boast an annual production output of over 20GWh.

This latest round of debt financing will help drive Northvolt’s goal of earning a 25% market share in Europe by 2030, which the company claims equals approximately 150GWh of commissioned annual production capacity.

The new financing will also support the company’s research and development in battery cell technology, process development and recycling at the recently established industrialization factory, Northvolt Labs, in Västerås, Sweden, which produced its first battery cells in late 2019.

Northvolt’s recycling development is integral to its development, as the company is seeking to secure 50% of the raw materials necessary for its production plans from recycled batteries. This ambitious recycling target will be achieved through the establishment of a full-scale recycling facility at Northvolt Ett.

“The momentum for electrification is stronger than ever,” said Peter Carlsson, co-founder and CEO, Northvolt. “Our customers need large volumes of high-quality batteries with a low CO2 footprint, and Europe must build a fully regionalized value chain to support them.”

The debt financing package was provided by a group of commercial banks and pension funds: APG, BNP Paribas, Danske Bank, Danica Pension, IMI – Intesa Sanpaolo, ING, KfW IPEX-Bank, PFA Pension, SEB, Siemens Bank, SMBC, Société Générale, Swedbank, and UniCredit, as well as the European Investment Bank, the Nordic Investment Bank, and the Export-Import Bank of Korea (KEXIM).

The loan is structured with certain guarantees from Euler Hermes (transaction subject to final approval), Nippon Export and Investment Insurance (NEXI) and BPI France.

“The fact that we have these world-class financial institutions supporting a new industry in Europe is a clear sign of where the markets are headed and the opportunity that brings for sustainable projects,” said Alexander Hartman, CFO, Northvolt. “This new industrial landscape will need significant investments over the coming years.”