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Volkswagen to invest ~US$1B in joint battery activities with Northvolt AB; acquiring ~20% of shares, JV for 16 GWh battery factory

Volkswagen AG is investing some €900 million (US$1.019 billion) in joint battery activities with Northvolt AB. Part of the sum is intended for a joint venture with the Swedish battery cell producer, a further share will go directly to Northvolt AB. Part of the sum is an element of Northvolt’s just-completed $1-billion equity capital raise, led by Volkswagen Group and Goldman Sachs Merchant Banking Division alongside BMW Group, AMF, Folksam Group and IMAS Foundation.

Volkswagen will acquire about 20% of the shares in Northvolt AB and will have one seat on the Board of Directors, subject to approval under antitrust legislation.

Furthermore, a 50/50 joint venture to build a 16 GWh battery cell factory in Europe is planned during the course of this year. It is intended to locate the factory in Lower Saxony (Salzgitter) if the preconditions for this are fulfilled.

Construction of the production facility is scheduled to start, at the earliest, in 2020. Battery cell production for Volkswagen is slated to commence around the end of 2023/beginning of 2024.

Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy. With Northvolt, we have now also found a European partner whose know-how and sustainable, CO2-optimized battery cell production processes will enable us to advance cell production here in Germany. The prerequisite for this is, of course, the creation of the necessary economic framework.

—Dr. Stefan Sommer, Member of the Volkswagen AG Board of Management responsible for Procurement

Under its electrification strategy, the Volkswagen Group’s annual capacity requirements in Europe alone from 2025 are in excess of 150 GWh; the company expects demand on a similar scale in Asia.

Northvolt is a European supplier of sustainable, high-quality battery cells and systems. The company is currently setting up pilot production of battery cells and a battery cell production facility (Northvolt Ett) with an initial capacity of 16 GWh in Sweden. The gigafactory will be expanded to at least 32 GWh.

After entering a number of supply agreements, a significant share of the production volumes from Northvolt Ett has been sold to key customers, amounting to a combined order value of more than $13 billion through 2030.

The European Investment Bank has approved in-principle a $400-million (€350-million) loan as a part of the total funding for Northvolt Ett. Together with additional debt being raised, the establishment of the initial 16 GWh of lithium-ion battery cell manufacturing capacity at Northvolt Ett is enabled. Building construction work will commence in August with large-scale production estimated to begin in 2021.

Founded in 2016 to enable the European transition to a decarbonized future, the company has made swift progress on its mission to deliver the world’s greenest lithium-ion battery with a minimal CO2 footprint and the highest ambitions for recycling. Apart from Volkswagen AG, Northvolt’s industrial partners and customers include Scania, ABB, BMW, Siemens, Vattenfall and Vestas.

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