Pre-IPO pedia | Northvolt, leader of the European power battery business, might go public in two years
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For a long time, Europe has been holding a dominant position in the global automotive industry. Back in 2017, the car exports of Europe reached 5.4 million units, accounting for over 40% of the global car value share that year.
For a long time, Europe has been holding a dominant position in the global automotive industry. Back in 2017, the car exports of Europe reached 5.4 million units, accounting for over 40% of the global car value share that year.
However, even with the world's strongest automotive industry, Europe has fallen behind in the tracks like new energy especially power cell, which has been quiet hot in recent years.
In 2016, Volkswagen, the world's largest car company at the time, was trapped in the "emissions scandal" and finally paid more than €30 billion in fines and class action expenses.
This incident also signalled the urgent need for Europe to transform its automotive industry towards electrification. Among it, a key part is the production of lithium-ion batteries specifically for electric vehicles and energy storage systems.
At that time, several Asian battery giants has already grown up: Contemporary Amperex Technology and BYD in China, Panasonic in Japan and Samsung SDI in South Korea, whose batteries has already been used industrially at the time.
Faced with strong rivals, Europe was eager to build up a local industry chain to counter the rise of Asian battery suppliers.
Under such a circumstance, the Swedish power battery manufacturer Northvolt, which was born in 2016, could not have come at a better time.
In 2015, Peter Carlsson, a 44-year-old Swede, quit his job in Tesla.
Previously, Peter Carlsson spent more than 15 years at well-known telecommunications companies such as Ericsson and Sony Ericsson. In 201, he was asked by Elon Reeve Musk to join Tesla as Vice President of Supply Chain Management.
His rich experience in related industries made him keenly aware that lithium-ion technology would bring a huge transformation in electrification in the transport, energy storage and industrial fields.
At the same time, the two founders of the Swedish investment company Vargas, Harald Mix and Carl-Erik Lagercrantz, also notice the trend.
Previously involved in lithium battery procurement, Lagercrantz was often troubled by stock-outs and late deliveries when dealing with Japanese and South Korean companies, which made him realise that Europe needed to develop local power in the lithium-ion battery industry.
In 2014, Tesla set up its own battery factory (Gigafactory 1) in Nevada, USA, to supply battery packs for the company's electric vehicles.
This has greatly inspired Mix and Lagercrantz, and they decided to invite Peter Carlsson, who previously worked on the Gigafactory 1 supply chain, for a further cooperation.
Finally, Peter Carlsson built his own team and founded a battery manufacturing company called SGF Energy in 2016, which was renamed Northvolt in 2017.
Their goal is to build a lithium battery super factory in Europe.
In the same year, the EU established the Battery Industry Alliance to provide financial and technical support to European battery manufacturers in order to decrease dependence on Asian battery manufacturers and to promote the development of the local battery industry.
Northvolt has been an active participant in the Battery Industry Alliance since its inception and also a priority beneficiary of various EU battery support policies.
Foe example, the announcement of the company's plans to build a battery factory in Sweden was met with a positive response from 40 municipalities in Sweden, who promised to offer maximum incentives in terms of land, electricity supply and infrastructure.
In addition, Northvolt has also cooperated with a number of industry giants such as Siemens, Scania and ABB since its inception, and has received technical support.
With the support from the political and business communities, Northvolt is rising rapidly.
Northvolt is a Swedish battery manufacturer specialising in specializing in lithium-ion technology for electric vehicles.
Northvolt's batteries are well-known for being environmentally friendl. They are manufactured with minimal carbon footprint and recycling technology, enabling the automotive industry to replace fossil fuels with electricity in an efficient way that reduces damage to the ecosystem.
The "greener lithium battery" is also the biggest selling point of Northvolt's products. The company claims that the suppliers of raw materials have to be certified to ensure that their mining activities do not impact the environment.
Northvolt's products are being anticipated by the public. Before the battery factory was even built, a lot of orders were already placed.
Up to now, Northvolt has secured a 10-year order from VW worth $14 billion and a €2 billion contract from the BMW.
It is worth noting that in December 2021, Northvolt announced that the company successfully produced its first lithium-ion battery at the Ett superfactory in northern Sweden.
It is the first lithium-ion battery that is designed, developed and assembled by a local European battery company at the superfactory, and these batteries are scheduled to be commercially delivered in 2022.
Northvolt said that over the next few years, the capacity of its battery plant, Northvolt Ett, will increase to 60 GWh per year to fulfill the more than US$50 billion worth of orders the company has already received.
Since its inception, Northvolt has completed nine rounds of funding for a total of US$6 billion. Major investors include Goldman Sachs, Siemens and Bpifrance, etc.
In June 2019, Northvolt raised $900 million from the Volkswagen Group, valuing at $1.6 billion.
In June 2020, Northvolt completed a debt financing round totalling US$1.6 billion and a private placement round totalling US$600 million in September of the same year, valuing at US$3.5 billion after that.
In June 2021, Northvolt raised US$2.8 billion from 19 investors, including Goldman Sachs, with its valuation soaring to US$12 billion.
In June 2022, according to the report of Carscoops, Northvolt plans to go public within the next two years due to a surge in demand for electric vehicle batteries.
Carl-Erik Lagercrantz, the founder and chairman of Northvolt said that "We are ready for IPO. Even as the company has no need from a funding perspective, it is still a reasonable expectation."
However, it is worth mentioning that until now, Northvolt has not delivered a single battery to its clients.
Although it already has contracts in hand from industry giants such as BMW, Volkswagen and Volvo, the technical status and safety performance of its batteries has yet to be tested by the market.
As things stand now, Northvolt still has a big gap with the Asian giants who are already at the forefront of the field in terms of corporate scale, market share and research capabilities.
In terms of production capacity, Northvolt will not be able to gradually form a large-scale supply until around 2023, with a maximum planned capacity of 60GWh. While in China, most of the leading companies have already exceeded their planned capacity of 100GWh by 2023.
In terms of battery technology, Northvolt is currently pushing mainly 21700 round cells and square cells for PHEV2, which do not have much of an advantage in terms of technology and battery characteristics.
Therefore, it is still unknown whether Northvolt can quickly build its core competitive advantage in the fierce competition.
In addition, insiders believe that the development prospects of the Northvolt are actually closely related to the position of the European automotive industry in the wave of electrification.
Most of the automotive-related resources and global supply chains, such as lithium and rare earths, are located outside Europe.
Northvolt has a long way to go if it hopes to become the leader of revolution of the curent European automotive industry.
Mooers, what do you think of Northvolt's future? Feel free to comment below.
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Riding the IPO wave, and find the new bull!
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OptionStrengthViewer : Suuuuuure…..so in 2 years it will go public…..we the retail investors buy in….only to be shorted by the short-hedgefund.
How about, whatever the price is we set limit 50 percent below the bid.
Str8Up : I am in definitely has promise if battery works
signetringer : Looks promising, can’t wait for their IPO.
Daniel Alexander : you tell us everything about NorthVolt except how to invest in a pre-IPO company.
72870546 : na, ill buy the dip
ColdMon : seems like a major short play.