Northvolt: battery maker’s volting ambition needs heavy backing

Sweden produces plenty of high energy thanks to its house music. Stockholm-based battery maker Northvolt hopes to make its own contribution as Europe’s regional champion for electric vehicle battery manufacturing. It is seeking $5bn of financing.

There is no doubting Northvolt’s ambition. It only produced its first batteries at the end of 2021. At least it is still in business, unlike ill-fated UK rival Britishvolt, which collapsed in January.

Like electrons, EV battery demand moves fast. Three years ago, monthly global battery sales averaged 8-10 GWh. In the past year that has swelled towards 30 GWh and could easily double in a few years. Northvolt aims to reach 60 GWh of output (roughly 800,000 batteries) by 2026, then on to 250GWh.

No wonder it needs cash. Northvolt has locked in some $55mn of sales agreements with partners BMW, Volkswagen, Volvo Cars and Scania trucks. The business plans to build four gigafactories, each producing about 60GWh a year. Its first plant, on the Arctic Circle, already produces batteries using renewables.

More are coming in Poland and Sweden. Another may go to Germany or possibly the US. Subsidies there are worth as much as $35 per kilowatt hour, according to Bernstein Research, around a quarter of current battery costs.

An equity listing is expected at some point next year. What might the battery maker be worth? Profits are years away. Current prices for its high performance, energy-dense nickel manganese cobalt (NMC) batteries are about $125 per kilowatt hour, says Rystad Energy. Producing 60GWh, Northvolt could generate some $7.5bn of annual revenues. On about two times top line, roughly what China’s CATL receives, Northvolt would be worth more than $15bn.

Northvolt is a young company in a hurry. Shareholders in mature industries will sit this dance out. But investors with quick moves of their own will appreciate the potential for local battery manufacturers in a continent well-endowed with carmakers.