Gigafactory giant raises $1.2bn for expansion in Europe and US
Swedish EV battery manufacturer Northvolt is reported to have raised $1.2 billion from investors, including BlackRock and several Canadian pension plans, as the gigafactory giant prepares to set up new operations in Europe and North America.
The funding, first reported by Reuters, comes as governments around the globe have set targets to increase the number of carbon footprint reducing electric cars on the road, which require lithium-ion batteries to run.
Such capital-intensive operations, however, require billions in funding to get off the ground.
A factory Northvolt is building near the German coastal city of Heide, for instance, announced last year, is thought to require around 3-5 billion euros ($8.8bn) – and more in subsidies.
While the German factory is Northvolt’s third, other attempts have failed to get off the ground. A separate enterprise, Britishvolt, a battery venture based in Northumberland, collapsed earlier this year despite a wave of initial fan fare and government support, because it couldn’t raise the cash.
The beleaguered venture is still in the process of being rescued by Australian firm Recharge Industries, although a final payment, as reported by UK broadcaster ITV, has yet to be made.
Nonetheless, investor demand for companies set to benefit from the low carbon economy is picking up pace. In June, Northvolt’s financiers Vargas launched what it has dubbed ‘household energy’s answer to Tesla’ – Aira – which is set to offer air source heat pumps to residential customers.
This operation will also require a gigafactory, for heat pumps, which has been sourced in Wroclaw, Poland.
Besides asset manager giant BlackRock, Northvolt’s latest funding round was backed by Canada Pension Plan, Ontario Municipal Employees Retirement System and Investment Management Corporation of Ontario.
Unfortunately for Britishvolt, it was unable to tap into pension funds because UK financial rules currently make it hard for investors to release funds from pension plans. However, a series of reforms are currently under way, with further actionable measures expected in this year’s Autumn statement.
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