Swedish Northvolt transforms the battery world

For a relatively small country, Sweden is surprisingly mighty in many areas, including cleantech. Northvolt is an exciting Swedish start-up that is leading the way in the battle for greener batteries.

In an increasingly electrified world, the demand for batteries is becoming insatiable. Electric vehicles, energy storage, consumer electronics and industrial applications are driving the demand for lithium-ion batteries. Swedish startup Northvolt has a mission to supply that demand in a sustainable way. 

Since 2016 Northvolt, with two former Tesla executives at its helm, has been ramping up European battery production. It is also recruiting talent from around the globe at an unprecedented pace from fewer than 15 people in 2017 to more than 2,000 today, comprising over 100 nationalities. 

In addition to establishing a European supply chain, beginning with one of Europe’s largest battery factories located in Skellefteå, Sweden, Northvolt is developing “the world’s greenest” battery. Northvolt batteries are designed to have a minimal CO2 footprint due to sustainable processes, including the use of 100 per cent renewable energy in its Swedish operations. Used batteries will be recycled at Northvolt’s recycling plant.

BMW, Scania and Volkswagen are already on board

Steven Cespedes, Northvolt’s Debt Finance Manager, believes that the combination of Northvolt’s idea, cleantech expertise and a sound financial business plan contributed to attracting investors and customers early on. “Investors also see the political momentum that’s taking place, with new regulations and a new direction in, for example, the automotive industry’s electrical transformation. This is a critical period of time for reinventing the business model and Northvolt is a strategic partner in Europe.” 

BMW, Scania and Volkswagen are examples of Northvolt’s automotive customers already committed to its lithium-ion batteries. Volkswagen placed a USD 14 billion battery cell order this year, and deliveries will start in 2024.

Northvolt’s European base and its approach to closing the loop differentiate it from other battery manufacturers. “From day one it was decided that whatever we produce we will need to recycle and we have had to develop the technical solutions for recycling, work on best-in-class technology, find new partners and implement a supply chain to collect used batteries on the market,” says Cespedes.

More big investments are required

Cespedes, who was recruited from France, believes that sustainability is in the DNA of Swedish companies. “It is a natural part of how businesses grow which is why we see so many sustainably driven businesses in Sweden. The regulatory aspect is favourable towards clean tech and the business environment here is favourable when creating a new company. The level of English is extremely good too which makes day-to-day life much easier from a foreign perspective.” 

Today, the main challenge for Northvolt is to ramp up from the startup stage to an industrial scale and that requires billions of investment dollars. “We have been quite successful in attracting equity in large amounts but it is a challenge to keep on securing large amounts of debt financing to finance CAPEX investments – and to do that in a timely manner as we tend to move faster than financing parties. Sometimes it can take two years to secure financing and that slows everything down,” says Cespedes.

He believes that banks need to move into “less comfortable territory” when financing such investments and allocate capital more quickly. “The emergency of the energy transition requires more flexibility and fluidity in financing,” Cespedes says. “It is a challenge for banks but this is definitely the business of the future so they need to shift their portfolio of financing and with that comes new risks. It is important to educate internally on how to cope with those new risks – and accept part of those risks as well.We also need export credit agencies to lend their support and bring liquidly to these kinds of projects. Those institutions have a key role to play in allocating capital for impactful projects like ours.”

Five great reasons to source Swedish suppliers in cleantech 

By sourcing Swedish suppliers for your cleantech projects you not only get the best expertise available, but you also get access to competitive financing backed by EKN:

1. It’s flexible

For a deal to be eligible for support from EKN, it has to benefit Swedish business interests. Given today’s globalised value chains, this can refer to many stages of the value-adding process, from research and development to production and marketing.  

2. It’s triple-A backed

Utilising an EKN cover gives you access to the triple A-rating enjoyed by the Kingdom of Sweden. This reduces your risk and lowers the cost of funding, while enabling tenors and interest rates that commercial banks are unable (or unwilling) to offer without backing. 

3. It’s long-term

EKN’s cooperation with state-owned Swedish Export Credit Corporation, SEK, permits an optional transfer of the credit to SEK once the lead/arrange phase is completed. To the lender, this paves the way for longer tenors and lower rates such as CIRR. 

4. It’s local

Financing large infrastructure projects that require imported goods to be paid for in hard currency can be a challenge for developing countries. EKN/SEK offer funding in local currency with longer tenors and lower yields, when certain conditions are met.

5. It’s easy

At the forefront of digitalisation, EKN offers automated routines that guarantee short turn-around times for most applications. We mean business – and we help you do better business.


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