Northvolt, a Swedish battery manufacturer that raised $ 1 billion in financing from investors led by Goldman Sachs and Volkswagen in 2019, signed a massive $ 14 billion battery order with VW for the next 10 years.
The big purchase clarifies some questions about where Volkswagen will get the batteries for its huge breakthrough in the electric vehicle market, which will make the automaker reach the production capacity of 1.5 million electric vehicles by 2025.
The deal will not only see Northvolt become the main strategic supplier of battery cells for the Volkswagen Group in Europe, but will also involve the German carmaker by increasing its shareholding in Northvolt.
As part of the partnership agreement, Northvolt’s gigafactory in Sweden will be expanded and Northvolt has agreed to sell its stake in the joint venture in Salzgitter, Germany, to Volkswagen, while the carmaker seeks to increase its battery manufacturing efforts across Europe , said the companies.
The agreement between Northvolt and VW raises the Swedish battery manufacturer’s total contracts to $ 27 billion over two years, since it raised its large $ 1 billion volume.
“Volkswagen is a key investor, customer and partner in the journey ahead and we will continue to work hard to provide the greenest battery on the planet as they rapidly expand their fleet of electric vehicles,” said Peter Carlsson, the co-founder and chief executive of Northvolt, in a statement.
Other Northvolt partners and customers include ABB, BMW Group, Scania, Siemens, Vattenfall and Vestas. Together, these companies comprise some of Europe’s largest manufacturers.
In 2019, the company said that its cell manufacturing capacity could reach 16 gigawatt-hours and that it had sold its capacity in the order of US $ 13 billion by 2030. This means that the deal with Volkswagen will consume a significant part of the lines expanded products.
Founded Carlsson, a former Tesla executive, Northvolt’s battery business intended to jump the European Union into direct competition with Asia’s largest battery manufacturers – Samsung, LG Chem and CATL.
When the company announced its $ 1 billion investment round, Carlsson said that Northvolt would need to build up to 150 gigawatt hours of capacity to achieve the goals. 2030 sales of electric vehicles.
The plant in Sweden is expected to reach at least 32 gigawatt hours of production thanks in part to the support of Swedish pension fund firms AMF and Folksam and IMAS Foundation linked to IKEA, in addition to the large financial partners Volkswagen and Goldman Sachs.
Northvolt had a few hectic months. In early March, the company announced the acquisition of startup Cuberg, based in Silicon Valley.
This acquisition gave Northvolt a position in the United States and established the company’s advanced technology center.
The acquisition also gives Northvolt a window into the newest battery chemistry that is being touted as a savior for the industry – lithium metal batteries.
Cuberg left Stanford University in 2015 to market what the company called a next generation battery by combining a liquid electrolyte with a lithium metal anode. The company’s customers include Boeing, BETA Technologies, Ampaire and VoltAero and was supported by Boeing HorizonX Ventures, Activate.org, California Energy Commission, the Department of Energy and the TomKat Center in Stanford.
Cuberg cells offer 70% greater reach and capacity compared to similar lithium ion cells designed for electrical aviation applications. The two companies hope to be able to apply the technology to Northvolt’s portfolio of automotive and industrial products with the ambition to industrialize cells in 2025 that exceed 1,000 Wh / L, while meeting the entire spectrum of automotive customer needs, according to an announcement.
“The Cuberg team demonstrated exceptional ability to develop world-class technology, proven results and an excellent customer base in a lean and efficient organization,” said Peter Carlsson, CEO and co-founder of Northvolt, in a statement. “Combining these strengths with Northvolt’s resources and technology allow us to make significant improvements in performance and safety, further reducing the costs of next generation battery cells. This is critical to accelerating the move to all-electric vehicles and responding to the needs of leading automotive companies in a relevant timeframe. “