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Battery makers amass war chests for factories

A battery factory in Sweden

Northvolt's battery factory Ett in northern Sweden. Photo courtesy of Northvolt

Battery makers across the globe continue to race to amass billions of dollars to produce batteries for electric vehicles and the power grid and tap into newly available government subsidies.

Why it matters: Companies in Europe and the U.S. are moving in tandem with government support to try to move swiftly to wrestle pieces of the battery supply chain away from China.

Driving the news: Swedish battery maker Northvolt announced that it's raising $5 billion in debt financing to build out its first large factory in northern Sweden and also develop a recycling plant there.

  • The company said the debt was "the largest green loan raised in Europe to date."
  • Northvolt is raising the financing from a group of 23 banks including the European Union's investment bank, the Swedish National Debt Office, and JP Morgan Chase. The funding includes the refinancing of a $1.6 billion debt package.
  • The company is reportedly looking at listing its shares in Stockholm as soon as this year.

Big picture: Northvolt is Europe's battery darling, but the same trend is happening in the U.S. as companies move to take advantage of Inflation Reduction Act funding.

  • Last year battery recycling and components maker Redwood Materials raised an equity round of over $1 billion and a $2 billion loan from the Department of Energy.
  • Meanwhile Ascend Elements raised $542 million in a deal co-led by BlackRock and Temasek to build a factory in Hopkinsville, Ky., which will make cathode battery materials using recycled battery sources.

Yes, but: The high cost of capital and construction with inflation means that some battery companies like Li-Cycle have struggled. The company paused construction of a giant production plant in Rochester, N.Y.

  • Other companies like Freyr have hit manufacturing hurdles.

What's next: Companies like Northvolt and Redwood Materials are in hyper growth phase but will eventually need to lower costs of manufacturing, particularly if they become public companies.

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