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German automotive giant Volkswagen AG has reportedly invested approximately USD 620 million in Northvolt AB’s USD 2.75 billion funding round. The move will allow the carmaker to secure the supply of lithium-ion batteries amidst high electric vehicle demand.
Battery maker Northvolt stated that the private fundraising was led by OMERS Capital Markets and Swedish National Pension Funds as well as existing investors Volkswagen and Goldman Sachs.
The fresh investments will be used to expand the manufacturing capacity of its plant in Northern Sweden to 60 GWh from 40 GWh to cater to the rising demand for electric vehicles, sources claimed.
Northvolt intends to begin production at its big factory in Skelleftea city later this year. The company claims to have raised over USD 6.5 billion in equity as well as debt to facilitate expansion leading to an annual production capacity of more than 150 GWh in Europe by 2030.
Battery makers worldwide have been trying to keep up with the increasing demand for battery-powered vehicles. Various investors have also been making headways into the EV space, further augmenting valuations of companies such as Tesla and Lucid Motors.
Northvolt, which rivals major Asian companies including CATL and LG Chem, intends to capture at least 25% market share in Europe by 2030. The battery maker recently announced an order from Volkswagen of over USD 14 billion in March.
It is worth mentioning here that Volkswagen currently owns around 20% stake in the Swedish company.
Northvolt has reportedly secured over USD 27 billion worth of contracts from important customers like BMW, Volkswagen, and Scania to date. The company is looking forward to establishing more than two factories in Germany in the coming decade.
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