VW Battery Maker Northvolt Raises $2.75 Billion in Financing

(Bloomberg) -- Swedish battery maker Northvolt AB raised $2.75 billion in its biggest financing round yet to expand its operations and cater to surging demand in Europe for cells made with green energy.

The private placement was co-led by Swedish pension funds AP1, AP2, AP3 and AP4, and Omers Capital Markets, alongside existing investors Goldman Sachs Asset Management and Volkswagen AG, according to a statement published on Wednesday.

“We need to enhance both the capacity as well as research and development as we have more parallel projects,” Northvolt Chief Executive Officer Peter Carlsson said in a phone interview. The funds will be spent on existing and new facilities, hiring R&D personnel and to support research for next-generation cell chemistries, he said.

The company, founded by former executives from Tesla Inc., currently leads European efforts to build a domestic supply chain for lithium-ion batteries in the region that has emerged as a key market for electric vehicles alongside China. As other projects in the region gather pace, Northvolt targets a 25% share of the European market by 2030.

VW, which aside from being a customer is also a key shareholder in Northvolt, contributed $620 million to the financing round, Europe’s largest automaker said in a separate statement. The capital injection allows it to maintain a roughly 20% stake in the Swedish company.

ATP, Denmark’s biggest pension fund, said it added 900 million kroner ($147 million) to an existing investment, bringing the total to 1.5 billion kroner. Its CEO, Bo Foged, said ATP’s involvement in Northvolt in the past two years “has obviously not been without risk, but Northvolt breathes sustainability into the entire value chain and that fits perfectly with our own ambition.”

The company will expand annual capacity at the Northvolt Ett factory in Skelleftea, Sweden, to 60 gigawatt hours, from an earlier target of 40 GWh. The Skelleftea plant will be the company’s first large-scale manufacturing facility, churning out cells by the end of this year. Northvolt currently has contracts worth more than $27 billion with customers including VW, BMW and Scania.

In order to meet its 2030 capacity target Northvolt plans to build at least two more battery factories in Europe over the coming decade and is considering Germany for the next plant, according to the statement.

The company is in talks with “several” German states, but for any project to go ahead it’s key that all parameters including green energy sourcing are in place, Carlsson said. Northvolt also “wouldn’t rule out partnerships” for new factory projects in Europe, he said.

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