Swedish EV battery startup Northvolt raises $5 billion in funding from BlackRock, others to expand its factory footprint

Northvolt, the Swedish lithium-ion battery startup founded by a former Tesla executive, has raised a massive $1.2 billion in funding to construct new manufacturing facilities in Europe and North America, the company announced Tuesday.

The round was led by BlackRock, the largest global asset manager, with participation from high-profile investors including Goldman Sachs, Volkswagen Baillie Gifford, Swedbank Robur, Singapore’s GIC, and Hong Kong-based Chow Tai Fook Enterprises.

Leading the round alongside BlackRock were the Canada Pension Plan, Ontario Municipal Employees Retirement System, and pension investor Investment Management Corporation of Ontario.

The new capital infusion, which comes through a convertible note, reflects growing investor interest in companies poised to thrive in the shift toward a low-carbon economy. Policies promoting this transition in both Europe and North America are further fueling the momentum behind investments in such enterprises.

“It’s a very capital intensive industry… finding the right mix is always hard in this new greenfield kind of transitional projects,” Chief Financial Officer Alexander Hartman told Reuters in an interview.

“The battery manufacturing sector has attractive growth potential driven by the accelerating adoption of battery storage and electric vehicles,” said David Giordano, global head of climate infrastructure at BlackRock. “As a leading investor in the energy transition, we look forward to supporting their continued growth.”

Hartman said the new capital infusion will help the 7-year-old startup expand its factory footprint and manufacturing capacity. Currently, Northvolt operates a number of factories throughout Europe, including the latest addition of a plant in Germany, which involved a significant investment of 600 million euros ($654 million) announced in May.

We first covered Northvolt in 2019 after the maker of electric vehicle batteries received a €5.8 million investment from EIT InnoEnergy to support its goal of using 50% recycled materials in all its new battery cells by 2030.

Then in March this year, the Swedish lithium-ion battery startup announced it was in talks to raise over $5 billion in funding to pursue its goal of becoming Europe’s biggest battery manufacturer. The Financial Times (FT) reported at the time the startup was currently negotiating with a number of banks to raise the amount and an agreement could be reached later this year.

The news also follows a report from Reuters last week that the startup is close to hiring banks for its initial public offering (IPO) in Europe or New York that could value the company at more than $20 billion.

In recent months, Northvolt has raised several billion dollars through debt issuances to finance its factory investments. This includes the issuance of $1.1 billion in convertible notes last year, which enabled the company to increase its production capacity at its gigafactory located in Skelleftea, Sweden.

Founded in 2016 by Peter Carlsson, a former executive at Tesla, and Paolo Cerruti, a former manager at Airbus, Northvolt is a Swedish battery manufacturing company that specializes in the production of lithium-ion batteries for electric vehicles and energy storage systems.

In just a few years, Northvolt has quickly become a leader in the European battery market and has established partnerships with several major companies, including Volkswagen, BMW, and ABB. The company’s goal is to produce high-quality, sustainable batteries that are designed to meet the growing demand for electric vehicles and renewable energy storage systems.

While the company currently maintains a facility in the United States, insider sources have indicated that the company is in the final stages of outlining plans for the construction of a multibillion-dollar battery factory in Canada. This anticipated announcement is slated for later this year.

Northvolt, however, has chosen not to provide any official statements regarding these potential factory plans.

With this recent funding round, Northvolt has successfully raised over $9 billion through both debt and equity since 2017, as part of its ambitious goal to establish itself as Europe’s leading battery manufacturer. Notably, the company secured $1.1 billion in convertible notes from various investors last year.

The firm has already garnered substantial orders, totaling over $55 billion, from notable customers including BMW, Fluence, Scania, Volvo Cars, and Volkswagen.

In a separate effort, Northvolt has also initiated the assembly of its inaugural energy storage system products in Poland. The company anticipates initiating customer deliveries starting later this year.

Meanwhile, Hartman declined to comment on whether the company was preparing to go public. “We have a business plan… we always want to make sure we have access to the markets,” he said.