Sweden’s NorthVolt Seeks $1 Billion Next Year To Take On Tesla

With a 4 billion euro ($4.2 billion) lithium-ion battery factory, the price of storing power is being sought to be cut in half by North Volt AB, the Swedish company founded by a former Tesla Inc. Executive.

According to founder Peter Carlsson, who was Tesla’s former head of sourcing and supply chains. NorthVolt will announce a shortlist of possible Swedish manufacturing sites in about a month, by 2018, 1 billion euros is sought to be raised by the Stockholm-based company at the time when it plans to break ground on a factory during the second half of the year.

“Europe will be a very important market for energy storage,” Carlsson said by phone. “There is a huge need for back-up power. There is also a sizable auto industry that has made big promises to go electric.”

In the world’s transition to a zero-carbon economy, energy storage is seen as the missing link. From intermittent solar and wind energy, batteries can fill power gaps. For automakers banking on a new generation of plug-in vehicles, lithium-ion packs are also key.

The 46-year-old Chief Executive Officer has already raised $14 million to date. Carlsson’s seeking equity investors for half the capital needed to build the factory with the rest raised through debt and convinced Sweden’s biggest utility, Vattenfall AB, to invest 5 million kronor ($550,000). NorthVolt is could also issue green bonds for funding and is applying to the European Investment Bank for a loan.

“We typically don’t invest in hardware,” said Vattenfall’s head of strategy Andreas Regnell, who may be open to pumping more money into the venture. “We see this as more of a business development effort. There are huge benefits for us if this happens, given that we’re heavily invested in electric mobility infrastructure.”

“There are 19 million cars sold in the European Union per year,” Carlsson said. “If even 10 percent are going to be electric, which is a conservative estimate for 2025, that’s a huge opportunity for us.”

To help governments meet emission-reduction targets set under the 2015 Paris climate accord, automakers are racing to develop battery-powered versions of their vehicles. Compared to 2015 levels, the average fleet emissions would need to drop 27 percent by 2021 to meet EU targets. And compared to improvements made since 2010, that would require vehicle efficiency to more than double in the next five years.

While Volkswagen AG plans to manufacture 30 different electric models by 2025, Tesla, Nissan Motor Co. and General Motors, are already selling electric models in Europe.

Carlsson is focusing on supply local automakers rather than his previous employer while Tesla is said to be thinking of expanding to Europe.

“All of Tesla’s batteries go to support their products,” he said. “There’s plenty of other demand out there.”

“The scale that NorthVolt is talking about could certainly bring down the cost of battery packs,” said Logan Goldie-Scot, energy storage analyst at BNEF. He’s still “skeptical” that NorthVolt will be able to raise the 4 billion euros it needs.

“You can count the institutional investors that have put capital into energy storage projects on two hands. They’re still wary about technology risk and market risk in projects,” Goldie-Scot said. “We expect investors in battery production to share these concerns, especially around a pure-play manufacturer.”

(Adapted from Bloomberg)

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