VW and Goldman-backed battery creator Northvolt brings a $1.1 billion funding

July 7, 2022: -On Tuesday, Electric vehicle battery maker Northvolt announced a $1.1 billion funding increase, with a scope of investors, including Volkswagen and Goldman Sachs Asset Management, taking part in the capital increase.

In a statement, Sweden-based Northvolt said the $1.1 billion convertible note would be used to finance the company’s “expansion of battery cell and cathode material production in Europe to support the rapidly expanding demand for batteries.”

Other investors in the raise include Baillie Gifford, Swedbank Robur, PCS Holding, and TM Capital.

Recently, Northvolt said its initial gigafactory, Northvolt Ett, had started commercial deliveries to European customers. The company says it has orders amounting to $55 billion from businesses such as Volvo Cars, BMW, and Volkswagen.

Gigafactories are skills that create batteries for electric vehicles on a large scale. Tesla CEO Elon Musk has been credited as coining the term.

Northvolt’s most recent funding announcement comes when major European economies plan to move away from road-based vehicles that use diesel and gasoline.

For instance, the U.K. wants to stop selling new diesel and gasoline cars and vans in this decade. All latest cars and vans will require zero-tailpipe emissions by 2035. The European Union, which the U.K. left on Jan. 31, 2020, is pursuing similar targets.

As the number of electric vehicles on roads increases, the competition to develop factories capable of manufacturing EV batteries at scale is intensifying, with companies like Tesla and VW looking to establish a foothold in the sector.

In a statement issued Tuesday, Northvolt’s CEO and co-founder, Peter Carlsson, was bullish about the future.

“The combination of political decision making, customers, engaging even more firmly to the transition to electric vehicles, and a rapid rise in consumer demand for cleaner products has created a perfect storm for electrification,” he said.

According to the International Energy Agency, electric vehicle sales will hit 6.6 million in 2021. In the initial quarter of 2022, EV sales came to 2 million, a 75% increase corresponding to the first three months of 2021.