Debt Deal Turbocharges European Batteries

Swedish battery startup Northvolt secured Europe’s largest green bond to date. The $5 billion debt deal will help expand a “gigafactory” in Skellefteå, to include the first fully integrated circular battery production facility outside of Asia.

The debt package was provided by the European Investment Bank (EIB) and the Nordic Investment Bank—both supported by the InvestEU program of the European Commission (EC)—as well as 23 other commercial banks, including JPMorgan Chase, Citi and BNP Paribas.

Raised on the back of contracts worth $55 billion with BMW, Scania, Volvo and Volkswagen, it includes refinancing of a $1.6 billion debt package raised in July 2020.

With $1 billion, the EIB will provide the lion’s share of the financing, having previously supported Northvolt’s demo line in Västerås, as well as the initial phase of the Skellefteå factory, with the EC’s support.

“We should not underestimate the importance of this type of project in reaching Europe’s climate neutrality, and now we’re glad to continue our support for the expansion,” states EIB Vice President Thomas Östros.

The deal shows vision and intent when it comes to Europe’s battery industry, which is fighting to compete with the US and China.

“It is of strategic importance and a key battleground for global competitiveness. Northvolt, our battery pioneer, showcases that the EU has what it takes to build an innovative, sustainable, and globally competitive battery ecosystem,” EC Executive Vice President Maroš Šefčovič, who is leading the commission’s work on the European Green Deal and the European Battery Alliance, comments in a statement. “I am proud of Northvolt’s success story as well as of other 160 industrial projects taking shape across the entire value chain, while promoted under the European Battery Alliance. The EIB’s role is indispensable. We need to be strategic, bold, agile.” Northvolt has now secured more than $13 billion in equity and debt to enable its expansion in Europe and North America. This is the first loan raised through Northvolt’s Green Finance Framework, which was created in 2023. The company received the highest “dark green” rating attainable from the external rating company Cicero, being the first in its sector to do so.