Battery maker Northvolt has landed a $5bn loan that it claims is one of the largest green financing deals in history to help it expand one of its Swedish factories.

Northvolt, which counts BMW, Volkswagen and Volvo among its customers, announced today (Tuesday) that it has secured the financing to enable the expansion of its Northvolt Ett site at Skellefteå in northern Sweden.

Northvolt lauded that factory as a new chapter in European industrial history when it opened in 2021, claiming the lithium-ion cells produced were the first to have been fully designed, developed and assembled at a gigafactory by a homegrown European battery company.

Now, Northvolt claims to have made history once again with a massive financing package to expand that factory and a nearby recycling facility.

Alexander Hartman, CFO of Northvolt, said: “This has been an incredible team effort, involving long due diligence processes, new partnerships with strong institutions, and developing cutting edge financing structures focused on sustainability – all to close one of the largest green financing deals in history.”

The deal is also the “largest green loan raised in Europe to date,” claims Northvolt.

The new debt includes refinancing of a $1.6bn debt package secured in 2020, said Northvolt, and has been raised on the back of long-term offtake contracts amounting to over $55bn, including with BMW, Volvo and Volkswagen.

Those European carmakers have been trying to lessen their dependence on Asian cell and battery producers amid a rapid scaling up of electric vehicle production.

The loan is provided by a group of 23 commercial banks, as well as the European Investment Bank and the Nordic Investment Bank, who are supported by the European Commission’s InvestEU programme.

Peter Carlsson, co-founder and CEO of Northvolt, said: “This financing is a milestone for the European energy transition.”

“It will enable us to realize the full potential of Northvolt Ett and demonstrates that circular, sustainable business practices are fundamental to success in today’s industry.”

The deal follows Northvolt last year receiving $1.2bn in funding to expand its operations from backers including US investment giant BlackRock.

Northvolt said the funding means that it has now secured more than $13bn in equity and debt to enable its expansion in Europe and North America.

The recycling plant, Revolt Ett, is nearing the end of its commissioning and is processing its first materials, said Northvolt.

“The facility recovers battery-grade metals with a carbon footprint 70% lower than mined raw materials, thereby enabling a fully integrated, circular battery production setup that has not previously existed outside of Asia.”

Emma Nehrenheim, chief environmental officer at Northvolt, said: “I’m proud to see how our ambition to mass produce the world’s greenest battery attracts top-tier financial partners, as global capital is looking to invest in electrification and climate change mitigation.”