Electric vehicle battery cell producer Northvolt has secured a $1.6 billion debt package backed by a consortium of commercial banks, pension funds and public financial institutions, increasing the total capital raised to date for the development of factories and research and development to over $3 billion, the company said July 29.
Europe is playing catch up with China in the race to create an EV battery supply chain. Localized supply chains have been brought to the fore in the wake of the disruption caused by the coronavirus pandemic.
The European Battery alliance forecast the battery industry will be worth Eur250 billion ($294 billion) across Europe by 2025, and the demand for lithium ion cells across a number of industries, including vehicle electrification, is already increasing dramatically.
The debt financing package is provided by a group of commercial banks and pension funds: APG, BNP Paribas, Danske Bank, Danica Pension, IMI – Intesa Sanpaolo, ING, KfW IPEX-Bank, PFA Pension, SEB, Siemens Bank, SMBC, Societe Generale, Swedbank and UniCredit, as well as the European Investment Bank, the Nordic Investment Bank and the Export-Import Bank of Korea (KEXIM). The loan is structured with certain guarantees from Euler Hermes (transaction subject to final approval), Nippon Export and Investment Insurance (NEXI) and BPI France.
"The momentum for electrification is stronger than ever. Our customers need large volumes of high-quality batteries with a low CO2 footprint, and Europe must build a fully regionalized value chain to support them," Northvolt co-founder and CEO Peter Carlsson said.
The $3 billion in equity and debt will support the development of two gigafactories for lithium ion battery cell production: Northvolt Ett in Skelleftea, Sweden, and Northvolt Zwei in Salzgitter, Germany. The company is also making significant investments in battery cell technology, process development and recycling at the recently established industrialization factory, Northvolt Labs, in Vasteras, Sweden, which produced its first battery cells in late 2019.
Since launching in March 2017 Northvolt has grown to more than 700 people and now employs over 70 different nationalities at its facilities in Sweden, Germany and Poland, the company said.
Northvolt Ett, with a potential annual output of 40 GWh, is under construction and scheduled for start of production in 2021. In parallel, the permitting process is underway for Northvolt Zwei, which is being established as a joint venture together with the Volkswagen Group and scheduled to commence operations in 2024 with a potential output of more than 20 GWh. Northvolt also has an operational battery systems factory in Gdańsk, Poland.
Northvolt is targeting a 25% market share in Europe by 2030, equivalent to around 150 GWh a year of commissioned production capacity. At this same time, Northvolt aims to secure 50% of its raw material requirements from recycled batteries.
Lithium demand to balloon
There are handful of lithium development companies currently trying to bring local supply to the European market to secure supply chains and lower carbon footprints as the world gears up for net-zero ambitions.
The UK will need 50,000-60,000 mt a year of lithium carbonate equivalent for battery production to satisfy government plans to produce only electric vehicles by 2035, assuming production continues at around 1.2 million vehicles a year, according to lithium mine project developer Jeremy Wrathall.
But "the question is: where are we going to get all this material from, given that total lithium production is only 320,000 mt worldwide; this is a huge problem for the UK and an even bigger problem for the EU which may be producing around 18 million EVs a year," Wrathall said.
Manufacturer Britishvolt, no relation to Northvolt, earlier this month signed a memorandum of understanding with the Welsh government in a bid to build the UK's first large-scale electric vehicle battery factory.
Speaking with S&P Global Platts, Britishvolt CEO and founder Orral Nadjari said all the initial funds are in place to move forward with the project, and progress to the next phase. He also said that by the first quarter of 2021 the company could be in a position to list publicly, which would help with raising the around GBP1.2 billion ($1.5 billion) needed to get the facility up and running.
"There is enough money in the bank [to push forward] and start talking to the end-users and find out exactly what they want," he said.
He added that capital markets are "aligned" to move the economy toward a greener, sustainable future.
Northvolt, Hydro JV
Back in June Northvolt and aluminum producer Norsk Hydro initiated a joint venture, Hydro Volt, for the recycling of battery materials and aluminum from the Norwegian electric vehicles market.
Hydro Volt will start operations in Fredrikstad, Norway, with a feed of batteries coming from the Norwegian EV market, one of the most advanced in the world, according to a statement from Northvolt.
The launch of the JV follows an investment in Northvolt by Hydro in 2019.
"Northvolt has set a target for 50% of our raw material in 2030 coming from recycled batteries. The partnership with Hydro is an important piece of the puzzle to secure an external feed of material before our own batteries begin returning back to us," said Emma Nehrenheim, chief environmental officer responsible for the Revolt recycling business unit at Northvolt.
