Northvolt just raised another $1.6 billion in debt, bringing total debt and equity raised to $3 billion.
We recently interview Northvolt CEO Peter Carlsson about Northvolt’s history and plans (see the full interview in parts one, two, and three), giving much more insight and depth to what Northvolt’s plans are with that $3 billion. You cannot adequately summarize the content provided in that hour-long interview in a short paragraph or sentence, but one big note is that Northvolt sees a need and market for very localized battery production — from mining to cathodes and anodes to cells to modules and packs, which I’ll come back to in a moment.
The additional $1.6 billion comes from “a consortium of commercial banks, pension funds and public financial institutions.” This and the previously raised $1.4 billion are, according to Northvolt, for two battery gigafactories and “investments in R&D, industrialization and recycling.” Carlsson, who used to be a supply chain executive at Tesla, apparently has no problem adopting Tesla’s battery factory terminology (“gigafactories”).
In our podcast interview with Carlsson, he indicated that they had a goal to build approximately 150 gigawatt-hours (GWh) of annual battery production capacity in the next 10 years, and he noted at the time an expectation that 150 GWh will be 20–25% of the European lithium-ion battery market. Approximately 85% of that 150 GWh would be for electric vehicles and 15% for stationary energy storage. In the press release regarding the new funding, Northvolt noted an expectation of having 25% of the European Li-ion battery market in 2030 — the higher end of the estimate he mentioned to us.
Carlsson talked a lot about the company’s goals to recycle batteries in order to cut down on raw material needs and costs while also being more sustainable. The news release reveals a goal of having 50% of raw materials coming from recycled batteries by 2030. That’s a particularly interesting goal, in my opinion, when you think about how long cars typically last (well over 10 years), that electric cars are expected to last longer, how many electric cars are on the road today that may retire by 2030, and how many batteries will be produced in 2030 (50% of Northvolt’s plans alone would be 75 GWh). I have a hard time seeing how the math works there, but I assume I’m overlooking something. Perhaps Northvolt is assuming high robotaxi use by then that puts an EV battery out of service much sooner due to nearly continuous use.
The potential problem without recycling is bottlenecks in the mineral mining. I explain that at length in “The Battery & Mining Catch-22 Threatening The EV Revolution” (podcast recording below as well). However, this is where another $1.6 billion for Northvolt could come in handy. That can possibly be used to firm up commitments for minerals so that mining companies can get to work creating the mines.
The two battery gigafactories Northvolt currently intends to build will be Northvolt Ett in Skellefteå, Sweden, and Northvolt Zwei in Salzgitter, Germany. Regarding factory operating costs, we talked a bit with Carlsson about how much low-cost renewable energy will help Northvolt’s factories operate at an extremely low cost (relatively speaking). On that topic, CleanTechnica‘s Max Holland led Carlsson into the topic in the following way:
“I’ve seen previous interviews you’ve done where you mentioned that Swedish hydro energy is quite a large part of your business model. Because on the one hand it’s obviously 100% carbon free, pretty much, and on the other hand it’s actually very inexpensive.
“And you said something like your energy bill savings from locating in Sweden and accessing this very inexpensive carbon-free energy might support something like 2,000 staff salaries, compared to paying that kind of energy bill in somewhere like China. Is that roughly the size of it?”
Part of Carlsson’s answer is here: “It’s a highly energy intensive industry. When we are fully built out, up in the northern part of Sweden, in Skellefteå, right now we’re aiming for roughly 40 gigawatt-hours. We estimate we will consume roughly 2% of Sweden’s electricity generation, about there.
“So, to produce a kilowatt-hour of battery, you basically consume somewhere towards 80 times that amount of energy [in the production phase]. And then both your cost of energy really, really matters, but also the carbon footprint of how that energy was generated really, really matters. And here I think we’ve found a formula where in northern Sweden this hydropower that we can get is roughly a fourth or a fifth of the cost versus the equivalent energy cost in Germany, for example. It is a fifth or a sixth of the cost — i.e., the energy is five to six times more expensive in China, coal based, versus our hydropower based.
“And when you’re starting to put that together on a massive scale, and you look at the equation of the bill of materials — without going into too much detail — the labor and the energy are starting to become very equal components. You could get energy in Northern Europe for below two euro cents per kilowatt-hour, which is making this really, really beneficial.”
Northvolt Ett in Sweden is currently under construction and may eventually have an annual production capacity of 40 GWh. Production may begin in 2021, next year.
Northvolt Zwei, which is a joint venture between Northvolt and Volkswagen Group, is going through the permitting process at the moment. Production is expected to begin in 2024, and annual output is expected to be 20 GWh or more.
A little more than 3 years after it launched (in March 2017), Northvolt has 700 people on staff in Sweden, Germany, and Poland. (Northvolt has a battery systems factory in Gdańsk, Poland, that is already operational.)
“The company is also making significant investments in battery cell technology, process development and recycling at the recently established industrialization factory, Northvolt Labs, in Västerås, Sweden, which produced its first battery cells in late 2019.”
Back to the news of the week, Northvolt’s increased debt financing, that $1.6 billion is coming from: APG, BNP Paribas, Danske Bank, Danica Pension, IMI – Intesa Sanpaolo, ING, KfW IPEX-Bank, PFA Pension, SEB, Siemens Bank, SMBC, Société Générale, Swedbank and UniCredit, as well as the European Investment Bank, the Nordic Investment Bank and the Export-Import Bank of Korea (KEXIM). Alexander Hartman, Northvolt’s CFO, added:
“The fact that we have these world-class financial institutions supporting a new industry in Europe is a clear sign of where the markets are headed and the opportunity that brings for sustainable projects. This new industrial landscape will need significant investments over the coming years.”
Indeed. You’d have to be all kinds of stupid to not see where the auto market is headed. Actually, just look at where European auto markets are in 2020:
- Germany’s EV Market Share Hits All-Time Record, 11.4% in July — Up 4× Year on Year
- UK’s July EV Market Share At 9% — Up Almost 4× Year On Year
- France EV Market Share Hits 9.5% In July — And 4× Volume Growth Year On Year
- Sweden Plugin Vehicle Market Share Hits 29.5% In July, Up 3x Year On Year
- Norway Plugin Vehicle Market Share Now Over 68%
- Record EV Sales In Europe
Northvolt seems to have a healthy head start in an industry that is ready to bloom at a massive scale. Much of that is surely due to a combo of Carlsson’s foresight and his executive abilities. Have I recommended listening to or at least reading our interview with him?