Greenest battery on the planet — why we invested in Northvolt
By: Norrsken Vc
Tags: Impact Investing, Battery

The road transport industry accounts for 11% of global greenhouse gas emissions. If we are to meet the target set out by the Paris Agreement, global human-caused greenhouse gas emissions need to be reduced by 45% by 2030.

Electrification of road transport will play a big role in achieving those targets. Electric vehicles emit 30–60% fewer emissions than combustion engines depending on the power mix, whilst also improving local air quality by avoiding other toxic emissions, for example, nitrogen oxide or particulate matter.

Today there are 7 million electric vehicles on the roads, by 2030 there will be 130 million, and some believe that this is still a conservative estimate. We believe that the switch to electric vehicles will happen a lot faster than most believe. When we look back, we will think that the shift happened overnight. Are you still in doubt? We’ve seen it before.

If a horse pulled carriage was completely replaced by motor cars in just a decade, then it gives us a reason to believe that the transition to electric vehicles will happen even faster.

However, to enable a fast transition to more sustainable transportation — there is a problem that needs to be solved. While the demand for electric vehicles keeps rising and every major car manufacturer in the world is introducing electric fleets, there is a clear bottleneck that could slow down the transition — a lack of battery supply.

Batteries are the single most important and expensive part of the electric vehicles, accounting for 35–45% of the total production cost. The demand for batteries can’t keep up with the supply. In Europe, the battery demand from planned electric vehicle production is more than five times the estimated production volume of confirmed projects expected to be launched in Europe by 2040.

We are very excited to share the news that we have made an investment in Northvolt — a Swedish battery gigafactory, which aims to create the world’s greenest battery with a minimal carbon footprint and the highest ambitions for recycling to enable the European transition to renewable energy.

Northvolt is like no other start-up, started in 2016 by Peter Carlsson, Paolo Cerruti (both coming from Tesla) and Carl-Erik Lagercrantz (former vice president of Telenor) already from the get go they set out to build the largest battery gigafactory in Europe and are aiming to have 25% market share in Europe by 2030.

This is a later stage than our typical investment, but when we come across extraordinary opportunities, from time to time we allow ourselves to make an exception. We believe that Northvolt will play a key role in enabling European car manufacturers to pursue electrification eventually leading to significant road transport decarbonization.

And of course it is a great addition to our existing portfolio, which includes Heart Aerospace, Einride and a few more surprises in our pipeline (watch this space), so we also see strong synergies across our investments. As you can probably tell by now — we are big believers that the future is going to be electric!

Welcome to the Norrsken VC Family!