Rebecca Bellan Senior Reporter, Transportation rebeccabellan@techcrunch.com
Northvolt, a Swedish producer of lithium-ion batteries, has raised around $1.2 billion from BlackRock and various Canadian pension plans to build new factories in North America and Europe. This significant investment marks the first time Northvolt has shared concrete plans to build in North America.
The Investment and its Implications
The announcement on Tuesday signals a major milestone for Northvolt, which has been expanding rapidly in recent years. The $1.2 billion convertible note round was led by BlackRock and included participation from various Canadian pension plans, including the Canada Pension Plan, Ontario Municipal Employees Retirement System, and Investment Management Corporation of Ontario.
This investment brings Northvolt’s total funding to $9 billion in debt and equity since 2017, including $1.1 billion in convertible notes last year. The company has also secured more than $55 billion in orders from customers like BMW, Fluence, Scania, Volvo, and Volkswagen. Convertible notes can convert into equity at a later date, and many companies raise this type of short-term debt before filing for an initial public offering.
North America Expansion Plans
The investment will enable Northvolt to build new factories in North America, which is expected to be the company’s first major expansion outside of Europe. According to sources, Northvolt is close to finalizing plans to build a multibillion-dollar factory in Canada, which will be announced later this year.
Advantages of Building in North America
Building in North America will provide Northvolt with access to government incentives featured in President Joe Biden’s Inflation Reduction Act (IRA). The IRA aims to promote the production of electric vehicles and batteries by offering tax credits to companies that invest in these sectors. By building in North America, Northvolt can take advantage of these incentives and potentially reduce its costs.
The EV Battery Factory Construction Boom
Northvolt is not the only company to announce plans to build an EV battery factory in North America. A range of automakers and battery makers, including Hyundai, Stellantis, Panasonic, and SK Innovation, have announced plans to build EV battery factories in the U.S. or Canada.
The U.S.’s landmark climate legislation has created an arms race with the European Union, as many companies choose the U.S.’s carrots over the EU’s sticks and invest in battery production across the pond.
Northvolt’s Existing Operations
Most of Northvolt’s activity has been in Sweden, where the company has a gigafactory in Skellefteå and is building another in Gothenburg in partnership with Volvo. The battery maker is also building a battery plant in Germany and an energy storage factory in Poland.
Conclusion
Northvolt’s $1.2 billion investment will enable the company to expand its operations in North America, which is expected to be a significant growth driver for the company. With access to government incentives and a strong demand for EV batteries, Northvolt is well-positioned to capitalize on the growing market.
