Billed as Europe’s first home-grown “gigafactory” for advanced rechargeable batteries, the planned Northvolt Ett facility in Skellefteå, Sweden, has received a $600 million investment from a group that includes Daniel Ek, the founder of Spotify, the online music service.
Founded by former Tesla executives in 2016, Northvolt is seen as a rival to the U.S. electric car maker in its efforts to dominate the market for rechargeable batteries.
“We are in the middle of a race to establish manufacturing capacity in Europe, and I believe the companies that are best at attracting talent and capital, while scaling their blueprints the fastest, will be the most successful. With these world-class partners behind us, we have created a solid foundation to go on and execute our plans to enable large-scale manufacturing of green batteries in Europe,” Peter Carlsson, Northvolt’s managing director, said in a statement.
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The investment is the second the Stockholm-based Northvolt has announced since August, and, according to the firm, it has now received over $2.2 billion in funding from institutional investors, major car manufacturers and the European Investment Bank to develop Northvolt Ett as part of efforts to establish a production capacity capable of meeting its goal of meeting a quarter of Europe’s projected 600GWh demand for batteries in 2030.
In addition to its investment, BMW, a German carmaker, announced this July that in 2024 it would begin taking delivery of €2 billion ($2.34) worth of batteries from the plant for its electric models.
When complete, Northvolt Ett is expected to employ as many as 3,000 within the next five years. Northvolt, however, expects that the number of related jobs created could reach twice that. In August, Dongjin Semichem, a Korean firm that is establishing operations in Skellefteå to supply the plant, said it would hire 100.
Already known as a cluster for metalworking and mining firms, Skellefteå was also chosen as the location of Northvolt’s first plant due to the availability of renewable energy in the region. In 2018, it received a previous €52.5 million EU loan in the expectation that would help speed the electrification of European transport.
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The company’s ambition is to produce the “world’s greenest” lithium-ion battery, which it defines as using large amounts of recycled components in its products and by powering its operations solely with renewable energy.
The availability of large amounts of renewable energy, a cool climate and a highly skilled workforce has made Scandinavia a destination for tech firms seeking to set up server farms after Facebook set up operations there in 2013 as way to bring down costs and reduce its carbon footprint.
The pattern could be repeating itself when it comes to rechargeable batteries, according to Christoffer Svanberg, a spokesperson for Node Pole, which assists power-intensive companies seeking to establish operations in Sweden’s renewable-energy-rich northern regions.
If Northvolt Ett succeeds, he reckoned it would touch off growth in competing businesses and subcontractors in the entire region.
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Initially, the Skellefteå plant is expected to have an initial production capacity of 4GWh, making it the world’s biggest facility of its kind. Northvolt expects that, once fully built out, the plant will be able to produce 40GWh of batteries annually.
A second plant, Northvolt Zwei, in Salzgitter, Germany, capable of producing 16 GWh of batteries, is in the planning stages and could come online in 2024.
Yesterday’s announcement comes a week after Ek said he was ready to invest €1 billion — or about a third of his total wealth — into European “moonshot” technologies that would help make the continent a viable competitor to Silicon Valley when it came to attracting capital and talent.
Calling it a bid to achieve a “new European dream”, Ek said he would look to place his money in scientific innovations in fields like healthcare, education, machine learning and biotechnology.