VW and Goldman lead $1bn investment in Swedish battery project
A European attempt to build a battery maker that can challenge Tesla and Asian rivals has won the backing of Volkswagen, Goldman Sachs, Ikea and BMW, helping the Swedish project to raise $1bn of fresh capital.
Northvolt, a Swedish company set up by former Tesla executives, is using the $1bn to build its first factory in northern Sweden and a newly announced second plant in Lower Saxony in co-operation with VW, which is based in the northern German state.
The fundraising — on top of a promised €350m loan by the European Investment Bank — puts the Swedish group in pole position to be the first to establish a large European plant to take on Tesla’s gigafactory and those of Asian rivals such as Panasonic.
“Today is not only a great milestone for Northvolt, it also marks a key moment for Europe that clearly shows that we are ready to compete in the coming wave of electrification,” said Peter Carlsson, Northvolt’s chief executive and co-founder.
European carmakers have faced criticism for being slower into electric cars than some Asian manufacturers such as Toyota and Nissan as well as Tesla. VW said last year that it would spend €30bn over five years in an attempt to boost its fledgling production of electric cars to 3m a year by 2025.
VW and Goldman’s merchant banking arm are leading the $1bn equity fundraising for Northvolt. Others taking part include BMW, the IMAS Foundation from the Ikea furniture empire, and the Swedish pension funds AMF and Folksam.
Construction work will begin in August for the battery cell factory in Skelleftea, close to the Arctic Circle in northern Sweden, with annual capacity set to start at 16 gigawatt hours and be increased to at least 32GWh.
Tesla’s first gigafactory in Nevada in the US has a theoretical capacity of 35GWh per year but is running at about two-thirds of that, chief executive Elon Musk said in April.
VW and Northvolt are setting up a joint venture to build a 16GWh factory to open in late 2023 or early 2024 in Salzgitter, close to the German carmaker’s headquarters. In total, VW is investing €1bn together with Northvolt.
“Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy,” said Stefan Sommer, head of procurement at VW.
Northvolt faces competition from Asian groups setting up factories in Europe such as South Korea’s LG Chem and China’s CATL, which are building plants in Poland and Germany respectively.