Swedish EV battery startup Northvolt in talks to raise 200 million euros in short-term funding

A year ago, we covered Northvolt after the company secured $1.2 billion in funding from BlackRock and other investors to ramp up its factory operations. Now, the Swedish lithium-ion battery startup, founded by a former Tesla executive, is facing a cash crunch and is reportedly seeking additional funding.

According to Reuters, Northvolt is currently in discussions with investors and lenders to raise around 200 million euros ($218 million) in short-term financing as it works to stabilize its finances. Sources familiar with the negotiations say the talks have been ongoing this week, though the company is still aiming to secure more significant, long-term capital. These sources requested anonymity due to the confidential nature of the talks.

On Friday, Northvolt reiterated its September 24 statement, highlighting recent progress in its fundraising efforts, but declined to offer further details.

The company, which was once Europe’s leading hope for an electric vehicle battery powerhouse, now finds itself scrambling for funds. One source mentioned that while the short-term funding could provide a temporary boost, it’s unclear how long it will last. It won’t be sufficient in the long run, the source added.

Late Thursday, Northvolt confirmed it would be able to pay 287 million Swedish crowns ($27.59 million) in taxes due on Monday. Earlier reports indicated the company was exploring the sale of surplus battery materials to raise cash, Reuters reported.

In September, Northvolt announced plans to downsize and cut jobs, citing production challenges, weak demand, and increasing competition from China.

The potential short-term funding could come from a combination of pre-orders for batteries and loans, with shareholders, customers, and lenders all exploring ways to support the company, according to one source. A verbal agreement for 150 million euros is reportedly on the table, but nothing has been finalized yet.

These amounts are much smaller than what was initially reported. Swedish media had previously indicated Northvolt was seeking around 15 billion Swedish crowns ($1.44 billion) earlier this year, and more recently, 7.5 billion crowns.

Another source with direct knowledge of the situation mentioned that weekly meetings have been held, during which the amount Northvolt is asking for has steadily decreased.

Scania, a Northvolt shareholder and truck manufacturer, is reportedly leading the ongoing talks to secure funding, according to a source familiar with the situation. Another source confirmed Scania’s involvement in the discussions. While Scania acknowledged being in “close dialogue” with Northvolt, it declined to provide further details.

BMW, which canceled a $2 billion order earlier this year, is not part of the current fundraising efforts, according to a third source. A spokesperson for BMW confirmed that the automaker has no plans to alter its 2.8% stake in Northvolt but did not elaborate further.

Despite being a major player in the battery industry, Northvolt has faced difficulties in producing enough high-quality batteries, leading to BMW pulling out of its significant order. This shortfall has also contributed to delays in Scania’s electric vehicle production ramp-up.

Meanwhile, a spokesperson for Germany’s economy ministry stated that Northvolt remains committed to building its factory in Heide, northern Germany, with EU-approved state aid. The spokesperson also clarified that the current production challenges are primarily related to the Swedish company, and there are no discussions about additional German subsidies for the Heide project at this time.

“The current problems with the ramp-up are more directly caused by the Swedish company … Therefore, the question of German support for the Heide project with subsidies does not arise,” the spokesperson told Reuters.

We first covered Northvolt in 2019 when it received €5.8 million investment from EIT InnoEnergy to use 50% recycled materials in its battery cells by 2030. In March this year, Northvolt was reportedly in talks to raise over $5 billion to solidify its position as Europe’s largest battery manufacturer. The Financial Times reported that the startup was negotiating with several banks and hoped to finalize an agreement by the end of the year.

Recent reports suggest that Northvolt is close to hiring banks for an initial public offering (IPO) that could value the company at over $20 billion, with options for listings in Europe or New York.

In recent months, Northvolt has raised billions through debt to fund its factory investments. This includes $1.1 billion in convertible notes last year, which helped expand production capacity at its gigafactory in Skelleftea, Sweden.

Founded in 2016 by Peter Carlsson, a former Tesla executive, and Paolo Cerruti, a former Airbus manager, Northvolt specializes in producing lithium-ion batteries for electric vehicles and energy storage. The company has quickly risen to prominence in Europe, securing partnerships with major brands like Volkswagen, BMW, and ABB. Its mission is to create high-quality, sustainable batteries to meet the growing demand for electric vehicles and renewable energy solutions.

While Northvolt currently has a U.S. facility, insiders say the company is close to finalizing plans for a multibillion-dollar battery factory in Canada, with an official announcement expected later this year. Northvolt has declined to comment on these potential factory plans.