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VW and Goldman-backed Northvolt gets $1.1 billion funding

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Northvolt’s most up-to-date funding announcement comes at a time when major economies are laying out plans to maneuver away from vehicles that use diesel and gasoline.

Mikael Sjoberg | Bloomberg | Getty Images

Electric vehicle battery maker Northvolt on Tuesday announced a $1.1 billion funding boost, with a variety of investors — including Volkswagen and Goldman Sachs Asset Management — collaborating within the capital raise.

In an announcement, Sweden-based Northvolt said the $1.1 billion convertible note can be used to finance the corporate’s “expansion of battery cell and cathode material production in Europe to support the rapidly expanding demand for batteries.”

Other investors within the raise include Baillie Gifford, Swedbank Robur, PCS Holding and TM Capital.

Northvolt recently said its first gigafactory, Northvolt Ett, had began business deliveries to European customers. The firm says it has orders amounting to $55 billion from businesses resembling Volvo Cars, BMW, and Volkswagen.

Gigafactories are facilities that produce batteries for electric vehicles on a big scale. Tesla CEO Elon Musk has been widely credited as coining the term.

Read more about electric vehicles from CNBC Pro

Northvolt’s most up-to-date funding announcement comes at a time when major European economies are laying out plans to maneuver away from road-based vehicles that use diesel and gasoline.

The U.K., as an example, desires to stop the sale of recent diesel and gasoline cars and vans by 2030. It’ll require, from 2035, all recent cars and vans to have zero-tailpipe emissions. The European Union — which the U.K. left on Jan. 31, 2020 — is pursuing similar targets.

Because the number of electrical vehicles on our roads increases, the competition to develop factories capable of producing EV batteries at scale is intensifying, with firms like Tesla and VW looking to determine a foothold within the sector.

In an announcement issued Tuesday, Northvolt’s CEO and co-founder, Peter Carlsson — who previously worked for Tesla — was bullish concerning the future. 

“The mix of political decision making, customers committing much more firmly to the transition to electric vehicles, and a really rapid rise in consumer demand for cleaner products, has created an ideal storm for electrification,” he said.

In response to the International Energy Agency, electric vehicle sales hit 6.6 million in 2021. In the primary quarter of 2022, EV sales got here to 2 million, a 75% increase in comparison with the primary three months of 2021.

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