Northvolt has secured a US$5bn project financing with a group of banks and public financial institutions, as the Swedish battery startup positions itself as a key supplier for the electric vehicle industry.

The non-recourse financing – billed as the largest green loan ever raised in Europe – will enable Northvolt to grow manufacturing capacity at its battery gigafactory, Northvolt Ett, in the Swedish city of Skellefteåm.

Since beginning commercial operations in 2022, Northvolt Ett has secured long-term offtake contracts for its batteries worth over US$55bn from partners including BMW, Scania, Volvo Cars and Volkswagen. The plan is to expand the factory in several stages from its current capacity of 16GWh to 60GWh, it says.

The latest debt package – which refinances a pre-existing US$1.6bn facility for Northvolt Ett – will also drive expansion at Northvolt’s nearby Revolt Ett recycling plant, which once fully operational, aims to supply up to half of the gigafactory’s material needs for lithium, nickel, cobalt and manganese.

Funding is being provided by 23 commercial banks, alongside the European Investment Bank and the Nordic Investment Bank, while a group of European and Asian export credit agencies (ECAs) are also participating.

The Swedish National Debt Office, Euler Hermes, the Export-Import Bank of Korea, Nippon Export and Investment Insurance, as well as the Korea Trade Insurance Corporation are providing funding or guarantees and covering a “significant portion” of the commercial facilities, Northvolt says.

Standard Chartered is a mandated lead arranger (MLA) on the deal, while BNP Paribas serves as senior debt advisor.

KfW Ipex-Bank is supplying US$188mn of the project financing and is acting as a senior MLA as well as Euler Hermes coordination bank and agent. Allen & Overy and Mannheimer Swartling are legal advisors.

“This financing is a milestone for the European energy transition,” says Peter Carlsson, co-founder and CEO of Northvolt.

According to Standard Chartered, “it is the largest financing in the battery gigafactory space to date, and the first battery deal the bank has arranged”.

The financing is structured in line with the Loan Market Association’s Green Loan Principles and props up Northvolt’s ambition to mass produce the world’s greenest batteries.

“Thanks to the use of 100% green energy from regionally generated hydropower, the project is CO2-neutral and therefore significantly more sustainable than comparable projects,” says a KfW statement.

Northvolt has now secured more than US$13bn in equity and debt and expanded into new markets in Europe and North America, establishing facilities in Sweden, Poland, Germany, the US and Canada.