Northvolt secures $1.6bn backing for twin battery gigafactories

An assortment of public finance institutions, commercial banks and pension funds has issued another vote of confidence in Swedish battery manufacturer Northvolt. The company today announced it has raised $1.6 billion in debt financing to pursue its goal of securing 25% of Europe’s battery market by 2030 while sourcing half of its raw materials – including lithium and cobalt – from end-of-life batteries.

The investors backing Northvolt’s latest funding round are France’s BNP Paribas and Société Générale; Danish lender Danske Bank, its Danica Pension subsidiary and compatriot PFA Pension; the IMI division of Italian lender Intesa Sanpaolo and domestic rival UniCredit; Netherlands-based ING; The IPEX-Bank subsidiary of German development bank KfW; Swedish financial group SEB and compatriot lender Swedbank; Germany’s Siemens Bank, Japan’s SMBC; and an investor referred to as APG, as well as the European Investment Bank, the Nordic Investment Bank and the Export-Import Bank of Korea (Kexim).

Beyond those borrowings, guarantees to the loan structure will be provided by public entities Nippon Export and Investment Insurance (Nexi) and BPI France. Another guarantee tranche, from French credit insurance company Euler Hermes, is awaiting final approval. BNP Paribas and London-based Morgan Stanley & Co International will act as financial advisors to Northvolt.

The story so far

“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 Northvolt chief financial officer Alexander Hartman. “This new industrial landscape will need significant investments over the coming years.”

The battery manufacturer was launched in March 2017 and employs around 700 people in Sweden, Germany and Poland. Northvolt has a battery factory in Gdansk, in Poland, and runs the Northvolt Labs R&D facility in Västerås, Sweden.

The business had already raised $3 billion towards the cost of two gigafactories in previous financing rounds. The Northvolt Ett fab, in Skellefteå, Sweden, is under construction and aims to start producing 40 GWh of batteries by next year. The second planned gigafactory is at the permitting stage of development. The Northvolt Zwei Factory, in Salzgitter Germany, will manufacture 20 GWh of batteries per year.

“The momentum for electrification is stronger than ever,” said Peter Carlsson, co-founder and CEO of 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.”

Auto giants

German auto marque Volkswagen last year took a seat on the Northvolt board after investing $900 million into the business and rival BMW announced it had signed a $2 billion, long-term battery supply deal with the venture days after revealing plans for fully electric versions of its top-selling 5 and 7 series models.

With Northvolt estimating it would need 150 GWh of annual manufacturing capacity to hit its 25% of the European market target, the company is constructing a co-located hydrometallurgical recycling facility at the Northvolt Ett site, to help meet its recycled battery pledge.

The business is working with Norwegian battery collection firm Batteriretur and compatriot aluminum producer Hydro to source sufficient end-of-life batteries and to improve the economics of the recycling process. Hydro will pre-treat electric vehicle batteries to extract aluminum and ship the remaining material to Nothvolt’s recycling facility. The aim is to have the recycling scheme up and running and processing 8,000 tons of battery waste by 2022.