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Northvolt Is Taking On Tesla
And they might just come out on top.
To get a lead in the EV race, you need better batteries. It is one of the main reasons Tesla has held the top dog spot for so long now. Their 4680, though not quite what Musk promised back in 2020, is still one of the best batteries on the market. But, the competition is heating up, and not just from Chinese battery makers. Northolt, a Swedish battery maker, is making some huge moves right now that could dwarf Tesla in scale, price, performance, and sustainability.
Northvolt was founded by ex-Tesla executives, who have taken the same approach to rapidly grow this new startup. Namely, form partnerships, simplify design, and have unique products that people will love.
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In the early days, Tesla’s partnership with Panasonic enabled them to produce more EVs cheaper than anyone else. Similarly, Northvolt has had massive investments and partnerships with BMW, Volvo, VW, Scania, and Fluence. This has enabled them to expand their premises rapidly and develop next-gen technology no one else has.
Unlike most battery manufacturers, they only really offer a single high-performance lithium-ion battery chemistry they call “Lingonberry NMC.” You can get these in either a cylindrical cell, prismatic cell (i.e. block-like) or stacked as an already assembled power pack battery, and you can get them tuned for either lifespan, energy density or power density. This simplifies production lines, which significantly reduces costs and enables rapid growth whilst not being confined to a niche use. You can see the same design philosophy with the Model 3 and Y.
But, the feather in Northvolt’s cap is its sustainability. Unlike other battery manufacturers, they focus heavily on recycling and sourcing materials from more ethical and environmentally safe places. For example, by 2030, they want to use 100% renewable power in their factories, use 50% recycled materials and have a 90% smaller carbon footprint per battery than competitors. These aren’t just bold claims with no backing. They have already made cells with 100% recycled cobalt and manganese, something which hadn’t been done before. It’s also partnered with Stora Enso to produce sustainable wood-based graphite for the battery anodes, unlike the far more carbon-intensive mined graphite currently used in most cells. They have also partnered with Hamburg-based metal recycler European Metal Recycling to open a new recycling plant for electric car batteries in Hamburg-Billbrook. This site can process around 10,000 tons of battery packs per year, and provide Northvolt with recycled lithium, nickel, cobalt and manganese.
Although founded only seven years ago, Northvolt has grown incredibly quickly. As it stands today, their total annual battery output sits at around 60 GWh. That is enough to supply 1,000,000 Model 3’s with battery packs! For some perspective, Tesla produces approximately 37 GWh per year in total, and only around 4 GWh of that is its latest 4680. Now, some of Northvolt’s packs have found themselves in Polestars, Volvos, VWs, BMWs and even electric trucks, but they are also used in grid-level renewable energy storage, data centre energy storage, and in battery electric heavy machinery.
However, like Tesla, Northvolt isn’t staying still and is expanding rapidly. They recently announced that they have selected a location in Quebec to build a new $5 billion battery gigafactory called Northvolt Six. They are also constructing an adjacent battery recycling facility to supply the site with recycled raw materials. It is scheduled to be completed by 2026 and will produce 60 GWh worth of batteries annually, doubling Northvolt’s output!
With such insane expansion, the question has to be asked: how does Northvolt measure up against Tesla?
Well, there isn’t a lot of detail about Northvolt’s batteries out there, but what we know is through VW. The German automaker has claimed that it is purchasing batteries at $100 per kWh from Northvolt. That is about 30% cheaper than the average cell on the market, which is a significant cost saving! We also know Northvolt’s cell will likely be used in cars like the ID3 and ID4. Both of these cars have 77 kWh packs that can fast charge (10%-80%) in only 28 minutes. So, their energy density and charge speed are almost identical to Tesla’s.
But what about Tesla?
Well, Tesla plans to grow their 4680 production to over 1,000 GWh per year. Mind you, Tesla also promised full self-driving cars by 2020, so take that target with a massive pinch of salt (it is Elon, after all). The problem is that the technology behind the 4680 has some gigantic teething issues, so Musk is struggling to scale up production efficiently. This also means that some cost-saving measures are yet to be introduced to their cells. As such, the cheapest cell Tesla currently makes is the 4680 at $104 per kWh. This is cheap, but not as cheap as Northvolt. The smaller, 21700 cells that comprise the majority of Tesla’s output will be significantly more expensive, around $120 per kWh. Tesla did announce that the cost of the 4680 has declined by 54%, but Tesla China has since denied these claims, so this likely isn’t accurate. Testing has shown that the 4680 can fast charge (10% to 80% charge) in only 27 minutes. What’s more, Tesla doesn’t use recycled or sustainably sourced material in their batteries and hasn’t set up any facilities to recycle the batteries they are producing. In fact, the 4680 battery pack is set in epoxy, making battery repair nearly impossible and almost certainly leading to more e-waste in the future.
In summary, Northvolt appears to be cheaper and more sustainable than Tesla, whilst expanding battery production faster than Tesla. This doesn’t directly threaten Tesla’s EV lead, but it will enable its competitors to catch up. If you look at some of the recent models coming from the likes of VW, Škoda, Polestar and BMW, you can see that the price difference to Tesla is now minimal, in part thanks to Northvolt. Moreover, buying an EV with a more ethically and environmentally sound battery will become a huge selling point over the next few years. So, I genuinely think Northvolt could beat Tesla at their own game and become a dominant battery manufacturer in the West. But we will have to wait and find out, as only time will tell if I am right.
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