Northvolt Raises Over $1 Billion In Capital For New Gigafactories
Battery startup company Northvolt announced that it has managed to raise over $1 billion in new equity capital with the help of Volkswagen Group and Goldman Sachs' Merchant Banking Division. The company, which was founded by two former Tesla executives, plans to use the capital to build two battery gigafactories in Sweden and in Germany.
The firm is likely aiming to challenge Tesla and other Asian rivals in becoming the world's biggest battery producer. The first battery gigafactory will be built in Sweden, with construction slated to start in August. Meanwhile, the second battery gigafactory in Germany will be a fifty-fifty joint venture with Volkswagen Group.
Northvolt's funding round was also supported by the BMW Group, the IMAS Foundation, AMF, and the Folksam Group. Funds gained from these companies will be primarily used to build the Swedish gigafactory. Providing further debt financing for the massive project will be the European Investment Bank.
The factory in Sweden will be able to initially produce a maximum of 16 GWh of lithium-ion battery cells. The factory's manufacturing capacity will be significantly increased by 2021, with the facility producing an expected 32 GWh of lithium-ion battery cells.
Volkswagen released a statement this week announcing that it plans to invest over $1 billion in its joint project with Northvolt. Part of the money will be used to purchase a 20 percent stake in Northvolt, while the rest will be used to fund the fifty-fifty joint venture it has planned with the battery company.
The joint venture company will establish a 16 GWh battery cell gigafactory that will be located in Lower Saxony in Germany.
Construction of the German battery gigafactory is scheduled to take place sometime next year. The facility is expected to be fully operational by 2023, with plans to expand its capacity to 24 GWh. Volkswagen revealed that the factory is part of its multi-year plan to electrify its lineup.
The automaker sees its partnership with Northvolt as the right step to take to enable it to take advantage of cutting-edge sustainable technologies such as the Northvolt's CO2-optimized battery cell production processes.
Apart from Volkswagen, Northvolt plans to fill in the gap in the growing demand for lithium-ion battery cells from automotive manufacturers and other markets.
While companies such as Panasonic, Samsung, and Tesla do supply most of the markets, analysts predict that these firms may not be able to catch up with the growing demands as the electrification revolution continues. Volkwagen's demands in Europe alone are estimated to exceed 150 GWh per year. Meanwhile, the demands from manufacturers in Asia are also growing at an accelerated pace.