Volkswagen Group and Goldman Sachs Merchant Banking Division are leading a US$1bn equity capital raise in Northvolt, alongside BMW, AMF, Folksam and IMAS Foundation for 16 GWh lithium-ion battery cell manufacturing capacity. 

With the European Investment Bank and additional lenders 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. Construction will start 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 more than US$13bn through 2030. 

“Today is not only a great milestone for Northvolt, it also marks a key moment for Europe that clearly shows we are ready to compete in the coming wave of electrification and we will do so using battery cells which carry the lowest CO2 footprint possible,” said Northvolt CEO and co-founder, Peter Carlsson.

The transaction is subject to approval from the Swedish Competition Authority.  

As previously announced, the European Investment Bank has approved in-principle a US$400m loan as a part of the total funding for Northvolt Ett. Building work will commence in August with large-scale production estimated to begin in 2021. 

Northvolt Ett will serve as Northvolt’s primary production site, hosting active material preparation, cell assembly, recycling and auxiliaries. The gigafactory will be expanded to be at least 32 GWh. 

“With these financial and industrial partners coming together and getting behind our mission, we see a tremendous opportunity and momentum for further capacity expansion and product innovation over the coming years,” added Carlsson.

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. 

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 during the following years. 

During recent few years, Europe has witnessed remarkable growth in demand for domestic cell capacity driven by the industrial transition towards electrification.

“Over the past 15 years, we have built up our expertise across the entire value chain with regard to electro-mobility,” added BMW board member, Klaus Fröhlich. “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.” 

Since its official launch in March 2017, Northvolt has grown from 12 to almost 300 people.

The company has an operational research lab and two cell factories under construction in Sweden – Northvolt Ett in Skellefteå and Northvolt Labs in Västerås – as well as one battery systems factory in Gdansk already in production.