Northvolt's Plugged In: The Swedish Battery Maker Just Raised $5 Billion

Northvolt's Plugged In: The Swedish Battery Maker Just Raised $5 Billion
Theodora Lee Joseph, CFA

about 1 month ago2 mins

What’s going on here?

Well-connected Northvolt raised $5 billion, enough for the Swedish battery maker to supercharge a factory or two.

What does this mean?

Batteries are big business, with major industrial economies looking to swap fossil fuels for a more sustainable energy source. So for Northvolt, raising $5 billion in debt is a pittance compared to the potential payout that the future could bring. The Swedish company plans to invest the cash into both its existing battery factory and a new recycling center right next door, a setup that could rival some of China’s winning battery makers’ plots. Now, this isn’t Northvolt’s first foray into finance: the firm is Europe’s most-funded startup and boasts the biggest green European loan to date. But with blueprints for more massive factories in the works, Northvolt is considering going public to raise even more cash. And while the startup racked up over $1 billion in losses last year, investors will likely line up to give their portfolios some battery charge.

Green loans

Why should I care?

For markets: All for one, win for all.

Northvolt’s multi-billion-dollar loan makes it clear that there’s plenty of cash flowing into the clean energy circuit. See, governments have been investing in the battery sector to secure sustainable fuel for their money-making industries. Investors, too, have been pouring cash into the industry, keen to pocket a percentage when companies start plugging in batteries instead of burning the literal midnight oil.

Zooming out: The tower could topple.

Governments are particularly eager to build battery factories outside of China, in case geopolitical tensions compromise global trade. But that’s not the only risk for battery supply. Copper, for example, is a key ingredient in power grids, wind turbines, and makes up 12% of electric vehicle batteries. And with more countries stocking up, miners might struggle to keep up with demand. In fact, Chile – a major player in the copper sector – expects to see higher prices for the shiny stuff.

Copper outlook improves
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