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Europe’s largest green loan: Northvolt secures $5B for circular gigafactory

Picture credits: Northvolt

Northvolt, the Swedish battery manufacturer that counts BMW and Volkswagen as customers, has secured a $5 billion loan. It is the largest loan raised by a climate tech company in Europe to date. The loan amount came from a group of 23 commercial banks, alongside the European Investment Bank, which backed Ryvu Therapeutics and IQM, and the Nordic Investment Bank. 

With this, the total debt and equity investment raised by the company accounts for $13 billion. Notably, the previous backers of the Swedish battery manufacturer include BlackRock, Goldman Sachs, Volkswagen, and the IMAS foundation, IKEA’s investment wing.

Previously, Northvolt received $400 million from the Investment Management Corporation of Ontario (IMCO) and a $1.1 billion convertible note

Plans to expand its Swedish factory 

Northvolt, which produces batteries for electric vehicles, recently moved into making energy storage batteries. The company announced that it will deploy the amount to expand its first factory in Sweden, which is already manufacturing batteries.

In addition, the investment will more than double the capacity at the factory – Northvolt Ett. The current capacity of 16GWh will be expanded to go until full capacity. Already, Northvolt has factories in Poland, Germany, and Canada, and a couple of further sites in Sweden – one being a joint venture with Volvo and one that manufactures cathodes (a part of a battery). 

Sustainable battery production

Founded in 2016 in Stockholm by Peter Carlsson and Paolo Cerruti, Northvolt is on a mission to develop the world’s greenest battery cell and establish a European supply of batteries to enable the future of energy. 

Northvolt also plans to use the funding to grow a recycling plant beside the site. It intends to enable 50% of its raw material requirements to be sourced from recycled batteries by 2030. Late last year, the company developed a new battery based on sodium-ion technology, which uses less critical minerals. The sodium-ion batteries are said to be cheaper and safer than their lithium-ion counterparts, which are prone to a fire risk in gadgets and EVs. 

The company has already secured orders surpassing $55 billion from major car manufacturers, including Scania, BMW, Volvo Cars, and Volkswagen Group. Also, there are reports that Northvolt is prepping for an IPO, which could value it over $20 billion. 

“This financing is a milestone for the European energy transition. It will enable us to realise the full potential of Northvolt Ett and demonstrates that circular, sustainable business practices are fundamental to success in today’s industry,” said Peter Carlsson, co-founder and CEO of Northvolt. 

Alexander Hartman, CFO of Northvolt, commented: “This has been an incredible team effort, involving long due diligence processes, new partnerships with strong institutions, and developing cutting edge financing structures focused on sustainability – all to close one of the largest green financing deals in history.”

Emma Nehrenheim, Chief Environmental Officer at Northvolt, commented: “I’m proud to see how our ambition to mass produce the world’s greenest battery attracts top-tier financial partners, as global capital is looking to invest in electrification and climate change mitigation. It has become obvious that the creation of a new industry standard not only attracts world-leading talent, but also major financial institutions that aim to align their strategy with long-term macro trends.”

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