On Wednesday, Swedish manufacturer Northvolt said it raised $2.75 billion in equity, more than doubling the value of its privately held shares to nearly $5 billion.

The cash injection will help increase production capacity, expressed in gigawatt-hours (GWh) of cells supplied, at Northvolt’s first industrial-scale plant in Skellefteå, close to the Arctic Circle. 

“This is a new European industry in the making, and it will require significant investments over the coming decade,” said finance chief Alexander Hartman in a statement.

In the race to transition a road transport sector responsible for roughly one-fifth of its carbon footprint to cleaner cars and trucks, the EU has taken an early lead over the United States.

Despite the latter being home to Tesla, American customers bought only 231,000 battery electric vehicles last year, according to figures from the International Energy Agency, a decline of 5%. That’s compared with 747,000 in Europe, where volumes doubled thanks to a combination of generous incentives and strict tailpipe CO₂ caps for manufacturers.

Initially funded with help from the EU’s own bank, Northvolt previously had secured enough money from backers to break ground next year on an expansion that would increase the factory from 16 GWh to 40 GWh.

The latest round of financing allows Northvolt to move forward with its plan to complete the plant with a total of 60 GWh. That would be enough cells for 600,000 electric vehicles, each with a large 100 kilowatt-hour battery, or twice as many with a pack half the size.

To fulfill its goal of a 25% share of the European lithium-ion battery cell market by 2030, however, Northvolt now anticipates adding at least two more factories and is “actively exploring” building the next plant in Germany. 

While these should bring its total installed annual capacity to 150 GWh of cells, any decision in favor of a new site would require additional funds. It’s unclear at this point whether management would then consider a public share offering to broaden its investor base further.

“Whenever it’s time to build a second gigafactory, that will require more financing to be brought in,” a spokesman for the company told Fortune.

Roots in Tesla

Founded in 2016 by two former Tesla purchasing managers, Northvolt aims to deliver the world’s greenest lithium-ion battery by running its plants entirely with Scandinavian hydropower. This includes not just final assembly, but the more power-hungry manufacturing of critical materials found in a cell’s electrodes that other rivals procure directly. 

“To produce a one–kilowatt-hour battery, you can consume over a hundred times the amount of energy in the process,” cofounder and CEO Peter Carlsson said in late April during a Volkswagen event. 

More and more carmakers looking to reduce their carbon footprint are stipulating business partners rely on renewable power moving forward. Volkswagen, for example, promises to deliver its German-built ID.4 electric crossover to customers with no net new emissions not just in its own factories, but across the entire supply chain.

Northvolt, among the very first cell manufacturers to discover sustainability as a competitive advantage, so far has inked deals worth $27 billion with VW, its Swedish truck subsidiary Scania, as well as BMW and others. 

In a separate statement, Volkswagen confirmed it had fully participated in the capital hike to the tune of $620 million to maintain its roughly 20% stake and preserve its role as the largest individual shareholder.

The carmaker, which aims to wrest leadership of the market from Tesla, said earlier this year it would source up to 40 GWh of cells annually from Northvolt starting in 2023. These are expected to be installed in premium-brand vehicles like those built by its upscale brands Audi and Porsche. 

“Batteries are one of the key success factors in our unprecedented electric offensive,” said Thomas Schmall, member of the Volkswagen Group management board, adding VW is striving for a “pioneering role” in Europe in the area of sustainably produced green battery cells.

Northvolt’s latest private placement saw public pension funds in Sweden and the Canadian province of Ontario join as shareholders. A number of existing investors also poured in fresh cash, including Goldman Sachs, Spotify founder Daniel Ek, Swedish industrialist Cristina Stenbeck, U.K. investment fund Baillie Gifford, and a fund linked to the owner of furniture chain Ikea.