Northvolt, a Swedish battery manufacturer and Europe’s best-funded climate tech startup, has secured a $5bn loan to expand its factory in northern Sweden. It’s the largest loan raised by a climate tech company in Europe to date.
The loan comes from a group of 23 commercial banks, alongside the European Investment Bank and the Nordic Investment Bank. It brings the total debt and equity raised by the company to $13bn. Previous backers include BlackRock, Goldman Sachs, Volkswagen and the IMAS foundation — IKEA’s investment wing.
“This financing is a milestone for the European energy transition. It will enable us to realize the full potential of Northvolt Ett and demonstrates that circular, sustainable business practices are fundamental to success in today’s industry,” says Peter Carlsson, Cofounder and CEO of Northvolt, in a statement.
Northvolt produces batteries for electric vehicles and has recently moved into energy storage batteries too. It says it will use the new funding to expand its first factory in Sweden, which is already manufacturing batteries.
The investment will more than double the capacity at the factory Northvolt Ett from 16 gigawatt hours, however, there is still some way to go until full capacity, according to people close to the deal.
The company also has factories in Poland, Germany and Canada, as well as two further sites in Sweden, one a joint venture with Volvo and one which will manufacture cathodes (a part of a battery). As well as expanding the already existing factory in northern Sweden, Northvolt says it will use the funding to grow a recycling plant that sits next to the site.
Northvolt says it has received advanced orders worth $55bn from customers including Volvo, BMW, Volkswagen and Scania.
Setting up the infrastructure for battery manufacturing is capital-intensive, so the company has raised a series of large rounds in recent years. It secured a $1.2bn convertible note in August last year, following a $1.1bn convertible the year before.
Last week, it was announced that Northvolt was allowed to receive €902m in state aid from Germany to build its factory in the country. The package was announced in 2023 but was put in jeopardy after the country’s budget freeze. It then received the green light to begin construction work from both Germany and the EU.