Volkswagen invests $620 million in battery maker Northvolt

Swedish lithium-ion battery maker Northvolt has raised $2.75 billion in equity to expand capacity at the factory it is developing in northern Sweden to 60 gigawatt-hours (GWh) from 40GWh to meet the increasing demand for electric cars. The company said in a statement the private placement was led by Swedish pension funds AP1, AP2, AP3, AP4 and OMERS Capital Markets, alongside existing investors Goldman Sachs and Volkswagen.

Other Northvolt shareholders also participated, it added.

Battery makers across the world are seeking to keep up with demand as carmakers increasingly go electric. Investors have been rushing into the electric vehicle sector, pushing up valuations for companies such as Tesla and Lucid Motors.

Northvolt is planning to start production at its big factory in the city of Skelleftea later this year.

"Including the private placement, Northvolt has now raised more than $6.5 billion in equity and debt to enable an expansion plan leading up to and beyond 150 GWh of deployed annual production capacity in Europe by 2030," Northvolt said on Wednesday.

Northvolt, which aims to take on major Asian players such as CATL and LG Chem and targets a 25% market share in Europe by 2030, announced an order worth more than $14 billion from Volkswagen in March.

The carmaker holds around a 20% stake in the Swedish firm.

Northvolt has to date secured over $27 billion worth of contracts from key customers such as BMW, Scania and Volkswagen.

The company expects to build at least two more factories in Europe over the coming decade, and is looking at locating the next of these in Germany.