Northvolt secures $5 billion for Europe’s first circular gigafactory

Swedish battery maker Northvolt has raised $5 billion of debt financing to help it expand its first gigafactory in Sweden, Northvolt Ett, to up to 60 GWh of annual output capacity, in addition to building a recycling facility on the same site.

The finance package, which represents the largest green loan raised in Europe to date, comes from a group of 23 commercial banks, alongside the European Investment Bank (EIB) and the Nordic Investment Bank (NIB). It brings the total amount of debt and equity raised by the company to $13 billion.

“This financing is a milestone for the European energy transition. It will enable us to realize the full potential of Northvolt Ett and demonstrates that circular, sustainable business practices are fundamental to success in today’s industry,” Peter Carlsson, co-founder and CEO of Northvolt.

In addition to the expansion of Northvolt Ett’s cathode production and cell manufacturing, the financing package will enable the expansion of the adjacent recycling plant, Revolt Ett, which is approaching the conclusion of its commissioning and is processing its first materials.

“The facility recovers battery-grade metals with a carbon footprint 70% lower than mined raw materials, thereby enabling a fully integrated, circular battery production setup that has not previously existed outside of Asia,” the company said in an announcement this week.

Northvolt claims to be building the world’s greenest lithium-ion batteries with a minimal CO2 footprint. The company has managed to reduce its lithium-ion cell carbon footprint to 33 kg CO2/kWh — a two-thirds reduction compared to an industry reference. Its goal, however, is to establish 150 GWh of annual cell production by 2030 at 10 kg CO2/kWh with 50% of material for its lithium-ion cells coming from recycling.

Established in 2016, Northvolt has quickly become Europe’s best funded climate tech start-up, having secured the backing of big investors such as Volkswagen, BlackRock, and Goldman Sachs. Only last week, the company secured EU approval for EUR 902 million ($982 million) in German state aid to build an electric vehicle battery production plant in the north of Germany.

The new debt deal includes refinancing of a $1.6 billion debt package raised in July 2020, and has been raised on the back of long-term offtake contracts amounting to more than $55 billion, said the battery maker.

Through its financial implementing partners – the EIB and the NIB, the InvestEU program supports EUR 392 million investment in Europe’s first circular gigafactory. The program provides the EU with long-term funding by leveraging private and public funds in support of EU policy priorities.

“We mean business when it comes to Europe's battery industry,” Commission Executive Vice-President Maroš Šefčovič in charge of the European Green Deal and the European Battery Alliance said. “It is of strategic importance and a key battleground for global competitiveness. Northvolt, our battery pioneer, showcases that the EU has what it takes to build an innovative, sustainable, and globally competitive battery ecosystem.”

Šefčovič said that he is proud Northvolt's success story, as well as of other 160 industrial projects taking shape across the entire value chain, while promoted under the European Battery Alliance.

“The EIB's role is indispensable,” he added. “We need to be strategic, bold, agile.”

In December 2021, Northvolt bacame the first manufacturer to produce battery cells fully designed, developed and assembled by a homegrown European battery company. Those first cells rolled off its manufacturing lines at Northvolt Ett, which has an installed capacity of 16 GWh. In the meantime, the company has revealed plans for three more plants in Germany, Canada and Sweden.