Northvolt's gigafactory
Credit: Northvolt
There’s a boom-town feel in Skelleftea, 125 miles south of the Arctic circle, now that the Swedish battery start-up Northvolt is visibly forging ahead with Europe’s first gigafactory.
“I’ve lived here for 30 years, and the mood has never been this positive,” says says Bengt Ivansson, who as the municipality’s business development head, lured the company to the city back in 2017.
“We have construction cranes all over, land has become very expensive to buy, house prices are expanding at the most rapid rate in Sweden, and there’s a huge amount of investment.”
“About 100 years ago we found gold and that created a Klondike in Skelleftea, and we see the same thing happening now.”
Four vast rectangular buildings already stand complete on the snow-dusted site, and the company is set to soon start installing and commissioning the battery lines for the first phase of the $4bn (£2.9bn) Northvolt Ett plant, with production set to start at the end of next year.
In the first 16 GWh phase, it will supply enough batteries annually to power almost 300,000 electric vehicles, before doubling to 32 GWh by 2024 with the potential to later expand to 40GWh.
Peter Carlsson, the former Tesla executive behind the ambitious project, expects the coming years to be even more challenging than this one, when his team managed to commission their first battery line, at Northvolt Labs, its research and development facility near Stockholm, in the midst of a global pandemic.
“We have some tough years ahead of us,” he grins over the screen from the office, sporting a black hoodie carrying the company logo.
“It’s one thing to establish a line and a manufacturing setup in Vasteras, but Skelleftea is fifty times bigger, and commissioning will also include starting up the supply chain of key component raw materials… so we’re going to be busy over the next 24 months.”
For Mr Carlsson, Skelleftea’s chief attraction is the availability of large amounts of cheap hydroelectric power, which will allow Northvolt to both meet its ambition of producing the world’s greenest car batteries and give it an energy cost advantage over its Asian rivals.
“In Skelleftea, we had the advantage of energy, we had space, we had the raw material experience, and we had a region that really, really wanted this to happen,” he says.
Northvolt claims that its first batteries will generate around 30-40kg of carbon emissions per KWh, a number it hopes to bring as low as 10 kg/KWh by 2030, when it hopes half of its raw materials will come from a battery recycling plant on site.
Tesla’s Gigafactories
It estimates that a typical car battery produced today in Asia with fossil fuels generates more than 170kg/KWh.
Achieving this is only possible because the factory will run on almost 100pc fossil-free power, much of it generated from the Skellefte river which runs less than a mile from the plant.
The power requirements are colossal. Northvolt estimates it takes 80GWh to produce 1GWh of battery capacity, meaning it will need 1,280 GWh just to power the first 16GWh. That’s a third of what Skelleftea’s local power utility produced from its wind farms and hydro plants last year. The municipality has committed to strengthening the local power grid so that it can deliver 350MW of power to the factory.
The Northvolt sign on the west side of the plant
Credit: Oliver Szabo
If he had not been living in California at the time, recovering from four years at Tesla he describes as “a roller-coaster ride”, Mr Carlsson concedes he might never have conceived a scheme quite this audacious.
“It might have been more difficult if I had been in Sweden, because, you know, if somebody’s coming and saying, ‘I need $4bn dollars to build a kick-ass factory’, most people would probably laugh – and a number of them did.”
His team quickly silenced the sceptics, raising €350m from the European Investment Bank in May 2019, followed that June by a $1bn investment from Volkswagen, Goldman Sachs, and four other investors, and that September by the launch of a $1bn joint venture with Volkswagen to build a second factory in Germany.
This July it raised a further $1.6bn in debt and signed a $2bn supply contract with BMW.
In September this year, it raised a further $600m from Baillie Gifford and other UK-based investors.
“Being part of of this transformation and the team around [Telsa founder] Elon [Musk] gave a certain amount of credibility that that ‘here is a person that has the potential of doing this’,” he says.
Given that much of the world’s battery expertise is in Asia, coronavirus has been a huge challenge, making it hard to bring over equipment suppliers and commissioning experts when setting up its pilot battery line in Vasteras.
Production inside the Northvolt Labs
“We’re investing €200m and suddenly then comes Covid,” he remembers. “At the beginning of the year, we didn’t want people from Asia to come here, and then a couple of months later, when it spread to Europe and got reasonably contained in Asia, they didn’t want to come to Europe. So it’s been a tough, tough year: having to do a lot of these things on our own, rather than being reliant on these experts has been a headache.”
According to Tony Persson, head of battery production Swedish truck maker Scania, the early signs are positive. Mr Persson and his team have been testing some of Northvolt’s first batteries as they prepare to start work on their own battery pack assembly line, which will use Northvolt batteries.
“At this stage, it seems really good: they are stable, there are lots of ticks in all the boxes,” he reports. “We have a big trust in them.”
He believes Northvolt Ett will secure Sweden’s place at the forefront of the development of electric vehicles in Europe.
“It’s a super-important step for Sweden. With Northvolt, Scania, and Volvo, we will be self-sufficient in producing electric commercial vehicles, aside from the raw materials,” he points out. “Itvs a really unique situation in terms of competence and knowledge.”
Already, about 30pc of new cars purchased in Sweden are chargeable, the highest share in the European Union, and just behind Norway and Iceland. The country’s automotive trade body Bil Sweden, aims for that to rise to 80pc by the end of the decade. European truckmakers, led by Scania and Volvo, last week committed to making all new trucks fossil-free by 2040.
The Northvolt Labs site
Emma Nehrenheim, Northvolt’s Chief Environment Officer, takes her computer down to the Vasteras factory floor for a virtual tour of the cathode production line, where a thin sheet of aluminium is coated with nickel, cobalt, and manganese. The line is not currently operating, making it possible to look inside at the machines that speed the foil along.
“You see the astronauts in there,” she says, points the phone through a window into a sealed room where the anode and cathode foils are cut into squares and layered in a stack, the heads of the workers covered to prevent moisture escaping.
“These are rooms have to be dry and clean, and you can only be a certain amount of people in there at the same time,” she adds.
At Vasteras, less than half of the employees are native Swedes, and the technical skillset required for advanced battery production means the same is likely to be the case in Skelleftea. For Lorents Burman, Skelleftea’s mayor, this is not a problem.
“We don’t have the people here in the north of Sweden, so almost all the people will have to move to Skelleftea,” he says, explaining that for the best part of two decades the city has been battling industrial stagnation and population decline.
“Northvolt is the biggest factory in Sweden’s history – 3,000 people are going to work there, and we think it will create 10,000 jobs in the next ten years,” he says. To house them, the city plans to build 5,000 new houses over the next five years, and another 5,000 by 2030.
“It’s a new era,” Burman says, “and it’s going so fast.”
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