Swedish EV battery maker raises $1.2B to expand to North America

Northvolt, a Swedish producer of lithium-ion batteries, has raised around $1.2 billion from BlackRock and various Canadian pension plans to build new factories in North America and Europe, according to report from Reuters.

Tuesday's announcement signals the first time Northvolt has shared concrete plans to build in North America. If Northvolt builds in the U.S., it'll be able to take advantage of government incentives featured in President Joe Biden's Inflation Reduction Act (IRA). A range of automakers and battery makers — from Hyundai and Stellantis to Panasonic and SK Innovation — have in the last two years announced plans to build EV battery factories in the U.S. or Canada.

The U.S.'s landmark climate legislation has created an arms race with the European Union, as many companies choose the U.S.'s carrots over the EU's sticks and invest in battery production across the pond.

Northvolt didn't say where it will build in North America, but sources told Reuters the company is close to finalizing plans to build a multibillion-dollar factory in Canada, which will be announced later this year. The company already has a facility in California, where it is developing next-generation lithium-metal cell technology to power electric aviation.

Northvolt did not respond to TechCrunch to confirm its factory plans in North America, nor its intentions for expansion in Europe.

Most of Northvolt's activity has been in Sweden — the company has a gigafactory in Skellefteå and is building another in Gothenburg in partnership with Volvo. The battery maker is also building a battery plant in Germany and an energy storage factory in Poland.

BlackRock was joined in leading the $1.2 billion convertible note round by Canada Pension Plan, Ontario Municipal Employees Retirement System and pension investor Investment Management Corporation of Ontario, which had invested $400 million in Northvolt in June.

Participants in the round included Goldman Sachs, Volkswagen, Baillie Gifford, Swedbank Robur, Singapore's GIC and Hong Kong-based Chow Tai Fook Enterprises.

The latest round brings Northvolt's total funding to $9 billion in debt and equity since 2017, including $1.1 billion in convertible notes last year. The company has also secured more than $55 billion in orders from customers like BMW, Fluence, Scania, Volvo and Volkswagen.

Convertible notes can convert into equity at a later date, and many companies raise this type of short-term debt before filing for an initial public offering. The strong interest from heavy-hitter investors suggests a confidence in Northvolt's potential to grow and eventually go public at a high valuation.

While Northvolt has not shared plans to go public, Reuters reported in February, citing sources, that the company was indeed preparing for an IPO at a $20 billion valuation.