`KICK-ASS FACTORY' ENERGIZES SWEDEN'S FROZEN NORTH
Former Tesla exec aims to supply batteries for 300,000 vehicles, create up to 10,000 jobs
There's a boom town feel in Skelleftea, near the Arctic Circle, now that the Swedish battery startup, Northvolt, is forging ahead with Europe's first “gigafactory.”
“I've lived here for 30 years and the mood has never been this positive,” says Bengt Ivansson, who as the town'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.”
The company will soon start installing and commissioning battery lines for the first phase of the $4-billion Northvolt Ett plant, with production set for the end of next year.
In the first phase, it will supply enough batteries annually to power almost 300,000 electric vehicles, before doubling by 2024.
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 in Vasteras, its research and development facility near Stockholm, in the midst of a pandemic.
For 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 Asian rivals.
The factory will run on almost full fossil-free power, much of it generated from the Skellefte River, which runs nearby. The power requirements are colossal.
The town has committed to strengthening the local grid so it can deliver 350 megawatts of power to the factory.
If he had not been living in California at the time, recovering from four years at Tesla which he describes as “a roller-coaster ride,” Carlsson concedes he might never have conceived a scheme quite this audacious.
He adds: “It might have been more difficult if I had been in Sweden, because, you know, if somebody's coming and saying, `I need $4 billion to build a kick-ass factory,' most people would probably laugh — and a number of them did.”
His team quickly silenced the skeptics, raising 350 million euros from the European Investment Bank in May 2019, followed that June by a $1 billion investment from Volkswagen, Goldman Sachs and four other investors, and that September by the launch of a $1 billion joint venture with Volkswagen to build a second factory in Germany.
This July, it raised a further $1.6 billion in debt and signed a $2 billion supply contract with BMW.
“Being part of this transformation and the team around (Tesla founder) Elon Musk gave a certain amount of credibility 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 made it difficult to bring over equipment suppliers and commission experts when setting up its pilot battery line in Vasteras.
“We're investing 200 million euros and suddenly then comes COVID,” Carlsson says.
“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.”
Tony Persson, head of battery production at Swedish truck maker Scania, says early signs are positive.
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 adds: “With Northvolt, Scania and Volvo, we will be self-sufficient in producing electric commercial vehicles, aside from the raw materials. It's a really unique situation in terms of competence and knowledge.”
Already, about 30 per cent 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 80 per cent by the end of the decade. European truck makers, led by Scania and Volvo, have committed to making all new trucks fossil-free by 2040.
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 aluminum is coated with nickel, cobalt and manganese.
“You see the astronauts in there,” she says, pointing through a window into a sealed room where the anode and cathode foils are cut, the heads of the workers covered to prevent moisture escaping.
At Vasteras, fewer than half of the employees are Swedes, and the technical skill set 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, 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 10 years,” he says.
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.”