Sweden's Northvolt looks to challenge China's battery dominance

Northvolt, the Stockholm-based battery unicorn, is reportedly in talks for $5 billion in financing as it races to become Europe's biggest battery maker.

Why it matters: With roughly $8 billion raised to date and a valuation nearing $20 billion, Northvolt has the capital to loosen China's stranglehold over battery supply chains.

Driving the news: Northvolt is negotiating with multiple banks on the potential debt financing agreement, FT reported yesterday.

• A deal is expected as soon as this year. The company raised a $1.1 billion convertible note last summer.

State of play: Northvolt produced its first battery from an enormous factory near the Arctic Circle in 2021.

• It's started on a second giant factory with Volvo Cars, and is bringing a recycling plant online as well as expanding a battery systems factory.

The intrigue: Northvolt is debating whether to open its third factory in the U.S. or Germany.

Context: China controls 75% of the world's battery cell manufacturing capacity and 90% of anode and electrolyte production, per BloombergNEF.

What we're watching: Northvolt is discussing a potential IPO with Goldman Sachs, Morgan Stanley and JPMorgan.

• "It has almost constant capital needs because of its ambitious expansion plans so is likely to raise more in the coming months to finance all its activity," FT wrote in a deep-dive on the company this month.

Meanwhile, South Korea's LG Energy Solution said Friday it will invest $5.5 billion to build a sprawling EV battery factory near Phoenix.