Northvolt, a battery startup founded by two former Tesla executives, announced a $1 billion equity capital raise for its battery gigafactory in Sweden, in addition to a planned 50/50 joint venture with Volkswagen on another gigafactory in Germany.
The funding, led by Volkswagen Group and Goldman Sachs Merchant Banking Division, alongside BMW Group, AMF, Folksam Group, and IMAS Foundation, will allow Northvolt to establish manufacturing at its Swedish gigafactory:
With the European Investment Bank and additional lenders set 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. Building construction will commence in August.
Large-scale production at that gigafactory is expected to start in 2021, and its capacity will eventually expand to 32 GWh, Northvolt said.
In a separate release, Volkswagen announced that it’s investing some €900 million ($1 billion) in joint battery activities with Northvolt. The automaker is acquiring about 20% of Northvolt’s shares, and plans involve a 50/50 joint venture between the two companies on a 16 GWh battery cell gigafactory in Lower Saxony, Germany.
Construction on that gigafactory would begin in 2020 at the earliest, with battery cell production for Volkswagen starting in late 2023/early 2024, with the ability to increase capacity to 24 GWh later on.
Volkswagen board of management member Stefan Sommer said,
“Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy. With Northvolt, we have now also found a European partner whose know-how and sustainable, CO2-optimized battery cell production processes will enable us to advance cell production here in Germany. The prerequisite for this is, of course, the creation of the necessary economic framework.”
Volkswagen first partnered with Sweden’s Northvolt this March to create the European Battery Union consortium to advance EV batteries in Europe, and the partnership is now expanding. VW will get one seat on Northvolt’s board of directors, subject to approval.
We recently wrote about Volkswagen’s need to rethink its battery plan, due to Samsung’s inability to deliver — as the company noted in today’s release, VW’s annual capacity requirements in Europe alone from 2025 are in excess of 150 GWh, with similar demands expected in Asia. Through Northvolt, Volkswagen now has a path to meet at least some of those expectations.
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