Goldman-backed Volkswagen and NorthVolt secure $1.1 billion in financing

Electric car battery maker Northvolt announced Tuesday a $1.1 billion funding increase, with a group of investors — including Volkswagen and Goldman Sachs Asset Management — participating in the capital raise.

Sweden-based Northvolt said in a statement that the $1.1 billion convertible bond will be used to fund “the company’s expansion of battery and cathode cell production in Europe to support rapidly growing demand for batteries.”

Other investors in the increase include Billy Gifford, Swedbank Robor, BCS Holdings and TM Capital.

Northvolt recently said its first gigfactory, Northvolt Ett, has begun commercial deliveries to European customers. The company says it has orders of up to $55 billion from companies such as Volvo Cars, BMW and Volkswagen.

Giga factories are facilities that produce batteries for electric vehicles on a large scale. Tesla CEO Elon Musk is widely credited as coining the term.

Northvolt’s latest funding announcement comes at a time when major European economies are making plans to move away from road-based vehicles that use diesel and petrol.

The UK, for example, wants to stop selling diesel and petrol cars and vans by 2030. From 2035 it will require all zero-emission cars and vans. The European Union – which the United Kingdom left on January 31, 2020 – is pursuing similar goals.

As the number of electric cars on our roads increases, so does competition to develop factories capable of making large-scale electric car batteries, as companies like Tesla and VW look to establish a foothold in the sector.

In a statement Tuesday, Northvolt CEO and co-founder, Peter Carlsson — who previously worked at Tesla — was optimistic about the future.

“The combination of political decision-making, a more assertive customer commitment to the transition to electric vehicles, and a very rapid rise in consumer demand for cleaner products, created a perfect storm for electricity,” he said.

According to the International Energy Agency, sales of electric vehicles reached 6.6 million in 2021. In the first quarter of 2022, sales of electric vehicles reached 2 million, a 75% increase compared to the first three months of 2021.