Northvolt

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CTW.1122.Northvolt

Founded in 2016 by two former Tesla purchasing managers and financially backed early on by the EIB, the European Union’s development bank, Northvolt has grown to become its premier home-grown EV battery cell supplier. The company has raised close to $8 billion in equity and debt to finance its plans, while securing contracts worth roughly $55 billion from customers that include car brands BMW and Polestar as well as semitruck manufacturer Scania. Scania’s parent, Volkswagen Group, also owns a stake of approximately 22%, as does Goldman Sachs. 
 
To differentiate itself from lower-cost Asian competitors like China’s CATL or Japan’s Panasonic, Northvolt focuses more heavily on end-to-end sustainability in its manufacturing process, with an emphasis on renewable power and recycling of materials. Its first assembly plant, Northvolt Ett in Skellefteå, began commercial shipments this spring, and management has already signed deals to build two more factories, with a site in Germany due to open in 2025. Northvolt recently announced a different approach to greener batteries: The company said it plans to source renewable organic carbon for its EV cell anodes, using a plant-based polymer called lignin, derived from wood felled in sustainably managed Nordic forests.

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Electric vehicles are the quickest, most efficient, and most affordable means of transitioning to clean mobility. Yet the battery cells that will power those vehicles create two significant problems. First, those battery cells are expected to be in short supply, with carmakers dependent on a handful of dominant Asian manufacturers. Additionally, their production is extremely energy-intensive, bequeathing EVs with a substantial “well-to-wheel” carbon footprint when they roll off the assembly line. 
 
In Northvolt, two former Tesla purchasing managers set out to create a European battery cell champion with the scale to compete—because, in the words of cofounder Paolo Cerruti, “either you go big, or you go home” in this industry. To help carmakers lower their CO2 emissions across the entire supply chain, Northvolt will produce its cells exclusively using renewable energy—initially a risky differentiator, since many competitors are relying on cheap electricity from largely coal-fired grids. By the end of the decade Northvolt aims to produce the world’s greenest batteries, manufacturing 150 gigawatt-hours’ worth of cells annually for a 25% share of the European market. The next benchmark: Beginning battery assembly at its first industrial-scale factory, Ett, in Sweden, by year-end. Northvolt recently raised fresh funding to expand the site; the funding round valued the company at roughly $11 billion. While its battery cells haven’t yet appeared in any EVs sold to customers, the company’s test samples from its pilot production site have helped Northvolt secure over $27 billion worth of contracts from customers, and it counts Volkswagen, with 21%, as its largest shareholder. Consumers are likely to be able to buy cars powered by Northvolt’s European batteries no later than 2023.

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