As global demand for low-carbon batteries accelerates, Northvolt’s CEO plans to scale a sustainable and profitable business at record speed.
Launched in 2016, battery maker Northvolt continues to impress investors. In the last round of funding, the company was valued at more than $11 billion. From the start, cofounder and CEO Peter Carlsson has been on a mission to build the largest green-battery producer in the world. Where many saw a highly competitive and fragmented value chain, Carlsson spotted an opportunity in large-scale vertical integration of lithium-ion manufacturing at low cost and with low carbon intensity. Northvolt currently operates one gigafactory in Sweden and has plans to open several more.
In a conversation with McKinsey’s Rob W. Mathis and Tomas Nauclér, Carlsson discusses what it takes to build and scale a green business, the need for new types of partnerships, and how to tackle the talent shortage. An edited version of the conversation follows.
Peter Carlsson: I would say there were two major roadblocks. One was technology; know-how was not available in the surrounding area, which meant that we needed to bring in competence from different parts of the world. That was a challenge.
Second, this business is a scale business. It is kind of go big or go home, which means when you’re starting, you have a tremendous entry hurdle in terms of the capital expenditure you need to scale. We knew in the beginning that there is a fairly large risk that this wouldn’t succeed. But we still thought the opportunity to build a pioneer in Europe, and to do it in a sustainable way, outweighed the risk of failing.
McKinsey: And how did you overcome these roadblocks?
Peter Carlsson: We took a middle step to scale. We funded what we called Northvolt Labs, which was an R&D and industrialization facility. We assumed we needed roughly €100 million. To date, we have invested over €500 million.
But it’s also grown significantly in scale. And I guess that’s part of the entrepreneurial journey. You never know the full complexity of the route you’re taking. And if you knew, you wouldn’t start. Labs was one step to prove the product and process toward the larger step. And I think that was a key enabler….Read More...
Source : mckinsey
