Northvolt Secures $1.2 Billion in Funding for Lithium-Ion Battery Production
According to a report from Reuters, Northvolt, a Swedish company that produces lithium-ion batteries, has secured approximately $1.2 billion in funding from BlackRock and various Canadian pension plans. The funding will be used to construct new North America and Europe factories.
Northvolt announced on Tuesday that it plans to build a factory in North America, marking its first concrete plans for expansion in the region. If Northvolt decides to make it in the U.S., it would be able to benefit from the incentives included in President Joe Biden’s Inflation Reduction Act (IRA). Over the last two years, several automakers and battery manufacturers, including Hyundai, Stellantis, Panasonic, and S.K. Innovation, have announced their plans to build electric vehicle (E.V.) battery factories in the United States or Canada.
The United States’ game-changing climate legislation has sparked fierce competition with the European Union. Companies are opting for incentives in the U.S. over penalties in the E.U., leading to increased investment in battery production across the Atlantic.
Northvolt has not disclosed the location of its upcoming North American factory. Still, unnamed sources have revealed that the company is in the final stages of planning a multibillion-dollar facility in Canada. An official announcement is expected later this year. The company is based in California, developing lithium-metal cell technology that will power electric aviation. Northvolt has yet to comment on whether it plans to expand further in Europe.
Northvolt has primarily operated in Sweden, with a gigafactory located in Skellefteå and a new one constructed in Gothenburg through a partnership with Volvo. The battery manufacturer is also building a battery plant in Germany and an energy storage factory in Poland. BlackRock was the primary investor in the $1.2 billion convertible note round, with Canada Pension Plan, Ontario Municipal Employees Retirement System, and Investment Management Corporation of Ontario also contributing. In June, Northvolt had previously received $400 million in investment from the Investment Management Corporation of Ontario.
Goldman Sachs, Volkswagen, Baillie Gifford, Swedbank Robur, Singapore’s GIC, and Chow Tai Fook Enterprises participated in the round.
Since 2017, Northvolt has raised $9 billion in debt and equity funding, including $1.1 billion in convertible notes obtained last year. The company has received orders worth over $55 billion from major customers such as BMW, Fluence, Scania, Volvo, and Volkswagen. Northvolt has secured substantial financial support and customer trust, which is a testament to the quality of its products and services.
Many companies opt for convertible notes to raise short-term debt before filing for an initial public offering. The interest of prominent investors in Northvolt indicates their confidence in the company’s growth potential and possible future high valuation upon going public.
According to sources cited by Reuters in February, Northvolt is reportedly gearing up for an IPO valued at $20 billion. However, the company has not officially announced any public plans.