Northvolt Raises $1 Billion: Announces JV With Volkswagen

Northvolt raised €900 million for its first lithium-ion cell gigafactory in Sweden and together with Volkswagen, plans a 50/50 JV for a second gigafactory in Germany

June 12, 2019 was a big day for Northvolt, which completed a huge €900 million ($1 billion) equity capital raise, led by Volkswagen Group and Goldman Sachs Merchant Banking Division alongside BMW Group, AMF, Folksam Group and IMAS Foundation.

The Swedish company intends to build lithium-ion factories in Europe – first in Sweden, and through a new joint venture with Volkswagen, another one in Germany (more on that later).

The plan for the Northvolt gigafactory in Sweden:

“With the European Investment Bank and additional lenders set to provide debt financing as a part of the total funding, the establishment of the initial 16 GWh of lithium-ion battery cell manufacturing capacity at the gigafactory, Northvolt Ett, in Sweden is enabled. Building construction will commence in August.

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 $13 billion through 2030.”

The agreement between Volkswagen Group and Northvolt consists of two parts. VW will invest a total of around €900 million ($1 billion) in joint battery activities with Northvolt:

The joint venture will be formed later this year and set a new battery cell gigafactory for Volkswagen in Germany:

“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 $1 billion (€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.

Volkswagen Group is expected to need more than 150 GWh of lithium-ion battery cells annually in Europe and similar scale in Asia from 2025.

Dr. Stefan Sommer, Member of the Volkswagen AG Board of Management responsible for Procurement, commented:

“Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy. With Northvolt, we have now also found a European partner whose know-how and sustainable, CO2-optimized battery cell production processes will enable us to advance cell production here in Germany. The prerequisite for this is, of course, the creation of the necessary economic framework.”

Besides VW, also BMW Group is on-board with Northvolt, although so far we didn’t see any major investment.

“BMW Group is a strong supporter of locating additional battery manufacturers in Europe, with a focus on creating a sustainable value chain. Therefore, it has backed Northvolt’s potential and expertise from an early stage.”

Klaus Fröhlich, Member of the Board of Management of BMW AG, Development, commented:

“Over the past 15 years, we have built up our expertise across the entire value chain with regard to electro-mobility. With our flexible architecture and already the fifth generation of our electric drive trains, we will be able to scale up to high production volumes and better cater to changing customer demand. This is why we are using our know-how to support the development of the battery value creation chain in Europe along with several partners. Northvolt shares our approach to sustainability – from regenerative power generation to consistent recycling management. We look forward to jointly developing the next generation of battery technology with them.”

Northvolt expansion

Northvolt was founded in 2016 but grows quickly from 12 employees in March 2017 to almost 300 people now, including former Tesla, Daimler, LG Chem, Panasonic, Spotify and Google employees.

The First pilot lithium-ion cell production was launched in 2018. The first battery pack was delivered to Epiroc for underground mining machines.

Northvolt operations:

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