VW and Goldman Sachs back $600m fundraising by EU battery pioneer Northvolt

Swedish lithium-ion (Li-ion) battery start-up Northvolt has raised a further $600m in a private placement led by asset manager Baillie Gifford, Goldman Sachs and carmaker Volkswagen (VW), aimed at financing further investments for the expansion of its production and recycling capacity.

Northvolt aims to establish 150GWh of manufacturing capacity in Europe by 2030, and is well underway to build its first gigawatt battery cell factory in Sweden, dubbed Northvolt Ett.

“We are in the middle of a race to establish manufacturing capacity in Europe, and I believe the companies that are best at attracting talent and capital, while scaling their blueprints the fastest, will be the most successful,” Northvolt chief executive Peter Carlsson said.

“With these world-class partners behind us, we have created a solid foundation to go on and execute our plans to enable large-scale manufacturing of green batteries in Europe.”

European carmakers are in a race against US-based Tesla and Chinese companies such as BYD to build up a large electric vehicle production capacity, and for that want to become less dependent on Asian battery imports.

As more and more countries like the UK, as well as US states such as California, have put an end date to the sale of combustion engine cars, Northvolt’s ambitious plans to rapidly build up a European Li-ion battery cell production base is increasingly popular among investors.

A new group of international institutional investors through the capital placement join as Northvolt shareholders. Alongside Baillie Gifford, they include Baron Capital Group, Bridford Investments Ltd., and Norrsken VC & PCS Holding.

Private investors Cristina Stenbeck and Daniel Ek also participate in the equity raise together with existing Northvolt shareholders Goldman Sachs Merchant Banking Division, IMAS Foundation, Scania and Volkswagen AG.

Northvolt with the fresh capital intends to also expand its R&D activities, and establish a giga-scale battery recycling facility next to its under-construction Northvold Ett gigafactory in Sweden, that is slated to start production next year with a potential annual output of 40 gigawatt hours.

The company is also in the permitting process for a second factory – Northvolt Zwei – in Salzgitter, Germany, which is scheduled to start operations in 2024.

The battery cells and systems maker targets a 25% market share in Europe by 2030.

Among its industrial partners are also BMW, Scania, Siemens, Vattenfall and Vestas.