Sweden-based EV Battery Startup Northvolt, Founded by Former Tesla Execs, Raises $2.75 Billion in New Equity

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【Summary】Northvolt, a EV battery manufacturer founded by two former Tesla employees, announced the signing of a $2.75 billion private placement to finance further battery cell production capacity and R&D efforts to meet the increasing demand for EV batteries from customers, including automakers Volkswagen and BMW.

Eric Walz    Jul 18, 2021 9:45 AM PT
Sweden-based EV Battery Startup Northvolt, Founded by Former Tesla Execs, Raises $2.75 Billion in New Equity

Electric vehicle battery manufacturers around the world are making plans to expand production to meet the growing demand for batteries from the auto industry, especially in Europe as automakers shift to building more electric cars to meet the EU's climate goals by the end of the decade.

One such company is Sweden-based Northvolt AB, an EV battery startup founded by two former Tesla executives. The company announced the signing of a $2.75 billion private placement to finance further battery cell production capacity and R&D efforts in order to meet the increasing demand from customers, including Volkswagen and BMW, as the automakers ramp up their aggressive electric vehicle plans.

The private placement was co-led by new investors AP funds 1-4, via the co-owned company, 4 to 1 Investments, and OMERS, one of Canada's largest pension fund companies plans. Also participating in the latest financing were existing investors Goldman Sachs Asset Management and Volkswagen Group, Baillie Gifford, Baron Capital Group and others. 

With the private placement, Northvolt has now raised more than $6.5 billion to support the company's expansion plans of 150 GWh of annual production capacity in Europe by 2030. 

"We have a solid base of world-class investors and customers on-board who share Northvolt's mission of building the world's greenest battery to enable the European transition to renewable energy." said Peter Carlsson, Co-Founder and CEO of Northvolt.

Northvolt's first gigafactory in Skellefteå, Sweden, will be expanded from the earlier plan of 40 GWh to 60 GWh of annual production capacity in order to fulfill a $14 billion order from automaker Volkswagen that was announced earlier this year. The factory will begin production by the end of the year.

Northvolt chose the location in Sweden for its factory due to its proximity to the country's primary nickel, cobalt, lithium and graphite deposits, which are the raw materials needed for battery production.

To date, Northvolt said it secured more than $27 billion worth of contracts from European automakers, including Volkswagen BMW and Scania. The company also plans to establish recycling capabilities so that 50% of all its raw materials for battery production will be sourced from recycled EV batteries by 2030.

"We have been producing cells at our cell industrialization facility, Northvolt Labs, for more than a year and are excited to now bring the knowledge and technology we have developed to the north and start large-scale production," said Carlsson.

In order to meet its 2030 capacity target, Northvolt currently anticipates building at least two more gigafactories in Europe over the coming decade and is actively exploring building the next of these in Germany.

During the same timeframe, Northvolt foresees tremendous growth in other parts of the European value chain for battery manufacturing; from processing of raw materials to component and equipment manufacturing, to production of battery cells and systems and the build-up of recycling infrastructure.

"This is a new European industry in the making and it will require significant investments over the coming decade. It is encouraging to see that the investor community has identified the opportunity early, and we hope to see more investments throughout the value chain over the coming years," said Alexander Hartman, CFO of Northvolt.

Goldman Sachs Bank Europe SE and Morgan Stanley & Co. International plc act as financial advisors to Northvolt.

Northvolt was co-founded as SGF Energy in 2015 by Carlsson and Paolo Cerruti, both of whom previously worked for Tesla. Carlsson was the Global Head of Sourcing & Supply Chain at Tesla from 2011 to 2015 and worked alongside Tesla CEO Elon Musk for over four years. He helped launch the Model S and managed Tesla's supply chain of over 300 suppliers. 

Paolo Cerruti joined the company in 2016 after serving as VP of Global Supply Chain & Operations Planning at Tesla from March 2012 to Feb 2016. He serves as Northvolt's Chief Operating Officer.

SGF Energy officially changed its name to Northvolt in 2017.

Northvolt plans to continuously improve battery energy efficiency, including energy density and power in battery cells over the next 5 to 10 years.

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