Volkswagen Group confirmed that it placed a new order for $14 billion worth of battery cells from Northvolt’s Swedish gigafactory, and it is taking a bigger stake in the battery manufacturer.

Northvolt is a battery startup founded by two former Tesla executives who worked on Tesla’s Gigafactory 1 in Nevada with Panasonic.

The Swedish startup received investments from several companies, including Volkswagen, to build a massive battery factory in Sweden.

Volkswagen’s investment also came with the option to create a 50/50 joint-venture with the startup to build another battery factory to supply the automaker.

Northvolt is becoming a key partner for Volkswagen to secure battery supply long term in order to enable its electric transition.

Today, the two companies announced the “next step” in their partnership through a $14 billion battery cell order:

“Northvolt and Volkswagen Group today unveiled the next step in the partnership between the two companies, which was initiated in 2019. The collaboration will place a greater focus on Northvolt’s gigafactory in Sweden, which will be further expanded to support a combined order worth more than $ 14 billion over the next 10 years as Northvolt is selected by Volkswagen Group as a strategic lead supplier for premium battery cells in Europe. In total, Northvolt has now secured in excess of $ 27 billion worth of contracts from key customers.”

Peter Carlsson, Co-Founder and CEO of Northvolt, commented on the announcement:

“Volkswagen is a key investor, customer and partner on the journey ahead and we will continue to work hard with the goal of providing them with the greenest battery on the planet as they rapidly expand their fleet of electric vehicles,”

Northvolt had two battery gigafactory projects: Northvolt Zwei and Northvolt Ett.

The latter was in partnership with Volkswagen, and now Northvolt confirmed that it will sell its shares in the factory to Volkswagen.

The end result will be that Northvolt will consolidate its battery production at its Ett project while Volkswagen will own a bigger stake in Northvolt and the Zwei factory.

Thomas Schmall, Chairman of the Board of Management of Volkswagen Group Components, commented on the deal:

“Volkswagen will continue to deepen the collaboration and partnership with Northvolt. They are one of our key battery suppliers as we make the transition to electric mobility – and there is potential to expand this partnership even further,”

Ett is expected to have an annual output of 40 GWh and production is to start in 2021.

Northvolt Zwei, which is going to be now owned by VW, is currently in the permitting phase and should come online in 2024.

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