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Europe’s first large-scale battery factory could begin production as early as 2020. (Image credit: Northvolt)

Sweden’s mega battery factory set to open in 2020

André Anwar
03 November 2017 | updated 03 November 2017

Former Tesla executive Peter Carlsson wants to build the first large-scale battery factory for the European automotive industry in Sweden. The Swiss industrial group ABB and the state-owned Swedish energy group Vattenfall are already involved.

Stockholm. High-ranking experts have been warning over and over again that Europe, and Germany in particular with its car manufacturing industry, have fallen asleep at the wheel of the emerging electric car era. Vehicle batteries are regarded as the bottleneck in production, and there is no genuinely large battery production plant in Europe – at least not so far. 

Production to begin in 2020

Former Tesla executive Peter Carlsson and his company Northvolt want to change this by building a gigafactory for battery cells in Europe – and in doing so, help the European automotive industry catch up in the supplier race. 

Carlsson, a Swedish national, was previously the head of logistics at Tesla and one of the closest collaborators of Tesla CEO Elon Musk. 

The factory is expected to begin production in 2020, and a demo production line should be completed in 2019. Capacity is expected to reach 32 gigawatt hours per year. Up to 2,500 jobs will be created directly and indirectly with the factory, making it nearly as large as the Tesla factory in Nevada. Ultimately, it could supply nearly 500,000 European-manufactured electric cars with batteries each year. 

Renewable energy and locally mined materials

The factory will be built in Skellefteå in northern Sweden, as was recently announced. The region is already supplied solely with inexpensive hydroelectric power from the state-owned Swedish energy group Vattenfall – making climate-friendly and low-cost production an important sales argument.

Vattenfall is taking part in the gigafactory project. And there’s another local connection: some of the raw materials necessary for the batteries can be mined in Northern Europe, shortening supply routes.

ABB comes on board

The Swiss-Swedish technology group ABB is now on board, too, and will equip the factory with automation technology such as robots and electronics. ABB is also cooperating with Northvolt’s R&D department, which is located close to the innovation technology metropolis of Stockholm and not far from ABB’s Swedish headquarters in Västerås.

ABB and Northvolt signed a Memorandum of Understanding in September, calling the planned production plant “a uniquely integrated factory” and announcing that it will support the project through an early investment.

The EU, Sweden’s energy authorities and the Swedish shipping and transport group Stena also plan to join the project, according to Nothvolt.

Financing not yet certain

Carlsson still has one major hurdle to overcome: he needs a total of 40 billion kroner (4.1 billion euros) to get the project off the ground. 1 billion kroner should have already been raised by the summer as seed capital for the first production line, but Carlsson has officially raised only “a tenth” of this amount, according to the Swedish business newspaper Dagens Industri.

But some analysts regard ABB’s involvement as a sign that the project has good prospects. 

“The demand for batteries is growing exponentially at this time due to worldwide electrification. If Northvolt continues to be successful, it will be more than just one factory,” Johan Söderström, head of ABB Sweden, optimistically announced recently.

Asian companies not a threat

Peter Cerruti, Northvolt’s chief operating officer and another former Tesla executive, dismisses concerns that European carmakers would prefer to get their batteries from low-wage countries in Asia, in particular China where there are widespread plans to build large battery factory.

Asian companies have “no structural advantage”, he told the Financial Times. “It’s an automated process; you don’t need cheap labour but you do need skilled engineers. Energy is a very important part of cost. Europe needs to do something,” he added.