Pension funds join rush to build battery gigafactories

Pension funds join rush to build battery gigafactories

Business news |
By Nick Flaherty

The latest $2.75bn investment round from European battery startup Northvolt is bringing cash from pension funds, highlighting the growing importance to the regional economy.

This ninth round of funding brings the total investment to $6.5bn and was led by pension fund investors from Sweden and Canada alongside existing investors and customers such as Volkswagen.

The extra funding will capacity over 150 GWh a year by 2030. Northvolt’s first battery gigafactory, Northvolt Ett, in Skellefteå, Sweden, will actually start production later this year with a capacity boost from 40 GWh to 60 GWh of battery cells a year. This is to meet the increased demand from key customers, including a $14bn order from Volkswagen announced earlier this year.

That $6.5bn investment has already helped, Northvolt secure $27bn of contracts from key customers, including BMW, Fluence, Scania and Volkswagen. The plan also includes recycling capabilities to enable half of all its raw material requirements to be sourced from recycled batteries by 2030. This will be a key requirement for pension funds as they move to demonstrate the environmental sustainabilty of their investments over the long term.

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“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 Peter Carlsson, Co-Founder and CEO of Northvolt.

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 the opportunity of building the next of these in Germany.

In the same timeframe, Northvolt is looking at other parts of the European supply 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.

Also participating in the equity raise are current investors AMF, ATP, Baillie Gifford, Baron Capital Group, Bridford Investments Limited, Compagnia di San Paolo through Fondaco Growth, Cristina Stenbeck, Daniel Ek, IMAS Foundation, EIT InnoEnergy, Norrsken VC, PCS Holding, Scania and Stena Metall Finans.

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