If you’re in the electric vehicle industry or monitor it closely, you know one thing: batteries are big. Dropping battery prices are what have made electric cars competitive. As they drop further, they will make gasmobiles wildly uncompetitive. However, supply of batteries is limited, global production plans need to scale up a lot to hit electric vehicle (EV) plans and potential, and those who scale up smartly will likely lead on cost as well. Who’s going to jump on the wave with perfect timing and lead the market? LG Chem? Panasonic? Tesla? Samsung SDI? SK Innovation? Kreisel? … NorthVolt?
One former Tesla exec, Peter Carlsson, saw an opening in this market and is trying to scale up startup NorthVolt quickly in order to take advantage of it. As “global head of sourcing and supply chain” at Tesla for four years (technically, VP of Supply Chain from June 2011 to October 2015), I doubt Carlsson had any trouble finding investors for his idea. The vision is to build a 32 gigawatt-hour (GWh) battery factory that breaks ground in the second half of next year (2018) and starts delivering battery cells by the end of 2020.
Despite being out of the Tesla family for a couple of years, it’s easy to presume that Carlsson still has an excellent understanding of the global battery supply chain, as well as relationships with important players.
Bloomberg reports that NorthVolt, which Carlsson is CEO of, is “planning to close its first major fundraising round this autumn, potentially drawing in 100 million euros ($118 million).” That follows $14 million raised already, including 5 million kronor ($640,000) from Vattenfall, the largest utility in Sweden.
Regarding the round of funding NorthVolt is working on right now, Bloomberg writes, “It’s a ‘partnership round’ where the company is tapping its potential customers, such as carmakers, energy storage firms and industrial concerns, according to Chief Executive Officer Peter Carlsson.”
Presuming all goes as planned, the factory NorthVolt is planning would reach 32 GWh of annual production capacity from €4 billion of investment, but the next phase after this funding round would entail €1.2 billion to €1.4 billion of investment to put in place an 8 GWh per year “pre-production line” that would start operation in the second half of 2019.
As a reminder, the initial plan for the Tesla Gigafactory was 35 GWh per year, but that was increased substantially after customers demonstrated strong demand for the Tesla Model 3. The target was raised to 50 GWh and now perhaps even 100–150 GWh. An annual capacity of 35 GWh should be reached in 2018 instead of the initially targeted 2020.
Tesla CEO Elon Musk has indicated the Gigafactory is not just a single factory but something like a product itself — “the machine that makes the machine” can be replicated around the world as demand for electric vehicles grows. In fact, in 2014, Elon noted that hundreds of gigafactories would be needed. More recently, Volkswagen said it saw a need for 40 gigafactories for the electric car revolution. Tesla, LG Chem, and others are surely working on plans for new gigafactories, but I imagine there’s still plenty of room for a quality startup like NorthVolt to get rolling and become a major producer of EV batteries. We’ll see.
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