Northvolt CEO: Batteries, sustainability, Elon Musk and speed

And thereby, we get a significantly bigger impact on the green transition.

And a new emerging technology, I think we are rapidly evolving a footprint in, if I call it, the developing world, India, Middle East, Africa.

So, you know, a head-to-head competition with the Chinese is going to be difficult. What we are trying to do is that we can do it in a different way, we can stretch the technology, we can do it in a more circular way, and we can build customization and customer intimacy. Because batteries are going from kind of being commodity. Five, six years, when we went out to many of our customers, they were thinking as battery, as a black box. And today, as this market evolves, we see that the battery, it's a chemistry system.

As a chemistry system, you can basically optimize that towards the features that your products want to be and that your brand have as an aspiration. And what we perhaps have been a little bit better than some of our competitors is to work together with our customers' engineering groups on that optimization. You know, if you're a Volvo, you sell a lot of cars in the northern hemisphere. So, cold weather performance is a key feature for battery. If you're a Porsche, your customers don't want to stand waiting long at the charging station, they really want fast charging and, of course, large accelerations of charge discharge.

So, that kind of intimacy and optimizing the systems is also something that we see, this is where we can really differentiate. So, what do you actually need to be successful here?

And it is still a very emerging technology. So, I would say there's probably less than 100 people in the world, it's rapidly growing, that have that system, full system overview, and they are so important. Then, again, coming back to that, this is a scale business, then you need to be able to attract talent at scale. What does that mean? How many people is that?

Well, I mean, we've grown from 25 to 6,000 people in the last six years. But what I would say is, you know, per factory, you need a process engineering team that is very, very talented. And I think you need to be somewhere around 300 to 400, you know, really good process engineers per factory setup. So, that talent base, that is crucial to bring on. And this is a big, big bottleneck for the industry right now.

Then, obviously, you need the capital base. So, you need to have strong investors like yourself. How much money do you need? Well, as a rule of thumb, you basically need somewhere between 70 to 90 million US dollars per gigawatt hour that you're investing. In order to make scale and to become significant, we think that you need to reach at least somewhere between 200 to 300 gigawatt hours.

So, if you do the math, how much money is that? That is somewhere around 20 to 30 billion, give or take, 20 to 25 billion dollars in over time. Then, obviously, we've developed a model. So, this is not for the poor people? This is not for the poor people.

And then, of course, you need a scalable footprint. You need a way of setting up your lines and your factories that is systematic, that can be scaled in an efficient way. So, people, capital, and a scalable blueprint. I think that is the core. You mentioned the client relationships.

Volkswagen, Porsche. I met the CEO recently, who's really excited about this. How important are these relationships and the contracts you have? I mean, they are essential. If you didn't have any contracts, you couldn't go ahead?

You know, it has been.

. Excuse me, but are these not pretty?

But through these relationships that we managed to build, this has been crucial also to get our investors comfortable that we will not go the way solar cells went and where the Western kind of lost all the operations to Asia.

And Elon, for sure, stretched my comfort zone. What did you learn from him? What I learned from him is how powerful it is to drive a company with a super, super clear mission. You could argue about management methods, but you can't argue about the mission. And that is giving an incredible passion among people and loyalty.

Then he always challenged the conventional way. Why should ocean sea freight be slower? Why can't it be faster? I still remember one time we were sitting and we were looking at the cost of the Model S. And you were in the same room with him?

Yeah. I mean, we met weekly. In the beginning, we were basically giving away a check with every vehicle that we produced. And Elon told me, I would like the entire bill of material to be analyzed based on the cost of atoms for every part. And a vehicle is just a bill of material.

It's like 3,500 part numbers. And to analyze the cost of the atoms, I mean, it was like, it blew me away. It's like, holy shit, how do I do this? But we got the team to work through. And a couple of weeks later, we came back.

And it was actually a whole bunch of different learnings about what is the cost of atoms for steering gear? And what is the sales price? And does it make sense? We learned a lot. And I would not be here today.

I would not have dared to start Norfolk if I haven't been on that journey. Do you also have a reality distortion field?

Yes. I think sometimes I'm a little bit naive in what I think we can. So give.

And at the end, many times we are not reaching that stretch, but we're still reaching towards something that was better than what we started with. And that is, of course, very, very important when you are in any type of industry to continuously stretch. Can you do this a little bit faster? Can you do this a little bit more effective? Can we do it with a little bit less people?

And it is an interesting dispute, because I'm not sure who is going to budge first, to be honest. And it's not easy to see how you will find a win in that situation. But you have a situation where, if you're building a company and if you're starting up new factories, especially if new factories that haven't been built before, that's not done in a nine to five environment. You need extra flexibility from people. And normally, people are willing to give that.

It doesn't need to be demanded. Normally, you can get it on a voluntary basis. And then, when you're trying to convert this into how does this adhere with the collective bargaining agreement, you stumble into a whole bunch of bottlenecks with the central organization, because they are basically saying, you know, it's not that they don't understand what you need. But they are, of course, worried. if we give this flexibility to you, immediately, a Volvo or an ABB will start and come for the same.

And we get stuck to some extent in our regulation. I think actually, it is time to a little bit review some of these structures we have, because nothing comes for free. Succeeding also requires hard work. And as long as it is a mutual understanding, why not? But you know, why not allow people to work specifically during a certain period of time when you need that.

So which part of the?

Or is it the four shift structure? And there was a. this is a two shift structure. So we have two teams, 12 hours a day, six days a week, and then flexible overtimes on Sunday. And we are competing with with a five shift structure in order to fill the factory.

I'm not saying that we should go towards the Chinese model. But what I do say is that if they want to make a bigger impact, if they want to work a bit more, also making more, more money, we should have a bit more flexibility for that. Is that why you are starting factories outside Sweden? No, it is not. The reason why we, why we're doing that, is both proximity to customers, but it's also, you know, access to talent base.

We have recognized that in, you know, at least short term, with what we're doing in Västerås, what we're doing in Skellefteå and what we're in Gothenburg, we are draining a lot of the capabilities of, and the talent base that is in the, in the surrounding. So it is driven by other other reasons.

And we need to build a new infrastructure with renewable, you know, Norway and Sweden have the hydropower that is crucial in this, but then it is wind and solar. And, you know, there's probably a certain part also of nuclear. But all of these will create more and more instability in the grid, which means that your ability to store energy, to balance this in the grid, is also becoming crucial. And you also have the situation where we're sitting here in Stockholm today. Stockholm has basically an infrastructure, I think it is around three and a half thousand megawatts.

That's the copper cables that comes into the city. This is maxed out between nine and two o'clock in the day. And with all people that is now transforming into electric vehicles, you know, coming in from the suburbs, want to charge the vehicle during the day and get back, we probably need to create an additional maybe 50 percent increase during the peak hour. And we can either do it by digging up the entire city and, you know, pumping copper, or we can build energy storage in the city so that we can fill that up during the night and we can utilize it during the peak hour. And I think the later one is going to be a much more efficient model for how we develop that.

So the ability to store energy is absolutely crucial in the transition.

Then you have groundwater that has a strong lithium content. And they are, for example, South America, where you pump up and you're basically evaporating big brines. And this industry is evolving very fast. I have a little bit of a concern over creating these big dams in the desert in different, you know, over time, I think this will have a pretty big environmental impact. But there is also new technology emerging around so-called DRI.

So where you do direct reduction without these brines. So I think technology will solve it. Part of the challenge today is that almost all of this lithium in, if I call it an early concentration form, then goes to China to be processed into either lithium carbonate or lithium hydroxide. So, you know, the whole value or the processing part, I think, is somewhere between 80 to 85% of the world's production is in China. So that's an advantage that Chinese producers have.

It is an advantage. And this is where we need to build value chains. You know, we started a joint venture in Portugal together with Galp, to build one of Europe's first lithium processing. And this is a necessity to build these supply chains, because eventually batteries will be a regional business. Batteries are so heavy, they are a bit dangerous to transport.

And the customers would like to have just-in-time setups. So there will be a regionalization of the market. And as part of that regionalization, it's super crucial to build also these regional supply chains. Do every country have to have a battery production? Not every country needs to have it.

Does Norway need to have it? It's a good question. I think Norway probably has the opportunity of having good battery production, given its grid setup, from my point of view. But then there is a whole bunch of other things that need to come together for that to happen. But in reality, over the next, I would say, next couple of years, most of the decisions that will drive the transformation of the entire auto industry will be taken.

Where are my key strategies for battery supplies? Then it will take 10 years to execute them. But it is very important that Europe as a total is on our toes. Because if we don't have this infrastructure in the next decade, then the train has gone. And then the infrastructure is built up, and it's so much capital that it's going to be very difficult to change this.

So then we would be in a situation.

It is roughly half the energy density of high performance nickel batteries. But, for example, for energy storage and lower cost passenger cars, it works. And obviously, as a company, you're sitting and seeing that, and you're kind of, should we address that market? What should be our strategy? We've been struggling with how to approach this, I must admit, both from that we would be almost 100% dependent on Chinese active material, and the fact that this active material would come with a very large carbon footprint.

So it would be very difficult to kind of, you know, how do we combine our mission with this type of technology? And lastly, these LFP batteries, as they're less valuable, there hasn't been a natural development of recycling methodology. It's coming, but it's also going to require more regulatory and demands in order for that. to make it happen. When can you have a big production of this?

So we are right now working on our industrialization plan for this. And we think we can scale this up in the 2026, 2027 type of timeframes. What we're doing right now is...

What is also very interesting with sodium ion batteries is that lithium is very reactive, but sodium, you can basically heat up a sodium ion battery towards 300 degrees without getting a thermal runway. So they are inherently safer, which I think also becomes very important in both harsh conditions, you know, if you're putting battery storage in the desert, next to a solar farm, or if you're moving energy storage into cities and where the fire hazard is, of course, very, very important.

That is very important. And the end product of that is black mass. And out of that black mass, you can then either use pyrotechnology, so you use furnaces to remove it, but then you lose lithium. Or you can take the way that we've done, where you're using a hydrometallurgical separation. And then you can basically get over 90 towards 95% recyclability of nickel, of cobalt, but also of lithium.

Collectively, you can feel whether it's an energy, whether it's like a newsroom before the night's 7.

30 play, or whether it's a trader room in a stock market. That type of energy. That is important to me. The other important thing, and we worked a lot from day one, and we kept the same kind of core words, which is being bold, being passionate, and being excellent, as the key pillars of what we're doing. But one important thing when you're building something like this and that we're driving, that is, you cannot run at maximum speeds all the time.

It doesn't work like that. But when you're hitting a bottleneck, when you're being pressed towards a time plan, or you're finding an obstacle that is really difficult, that's when the light needs to be on. That's when you need part of an organization to sprint. And that principle is very, very important to me, that whenever we stumble, because it is still so, speed and the pace forward as a company is one of our biggest assets.

But then we're starting new sites, and we're bringing in more people. And it requires a bit of effort to bring everybody else into, what is it being a Northwalter? And this is crucial because-.

So we're on the path to achieve, the Vasaloppet is not the important thing, but basically what we said is, with this focus that we have on, on the ramp up in the factories, we will have our management teams up in Skellefteå on a weekly basis. This is where the focus needs to be. And, as a little bit of a feature to being in Skellefteå is the availability of snow. So Monday evenings, after we have had our management meetings, we're doing a joint training on cross-country skiing. And we have this excellent coach, his name is Klas Nilsson.

He won Nordensköldsloppet, which is the world's longest cross-country, it's 220 kilometers. So he has been helping us and as bringing the team together with, you know, one goal, it's been, it's been very, very, very fun, but we've started on very, very different levels.

But otherwise, I'm a strong believer in people. So I don't set the agendas for people, but I'm very focused on two things. One is how they, together with the team, achieve their objectives. And secondly, how they are building the teams around them, you know, how they're being talent attractors. And these for two is when I'm having performance reviews, these are the two parameters.

that is very, very important for me.

I was in an avalanche. And when they found me, I didn't breathe. So I actually don't recall it until I was on a helicopter on the way to a hospital and I was in pretty bad shape. But when I was recovering, I was laying there and thinking, what is, you know, what is important now that I got kind of a second chance? And then what came very, very clear, because I was also engaged in a whole bunch of other startups and things, it became very, very clear that this is my mission in life.

This is combining what I've learned from my career with my passion. This will be, hopefully, you know, the important effort of my life. And that is sometimes, you know, when you can feel a little bit almost overwhelmed, you know, what have I started when I kind of go back to, well, you know, at the end of the day, you know, this is really, really important. If we should be able to contain climate and global warming, to, you know, at least below two degrees, we need to take these dramatic, rapid actions and we need to be bold. And then, you know, I kind of, I get comfort in that.

It's like almost like a goldfish.

Lastly, Peter, what is your advice to young people?

One was, and I think it's from the Google founders, is a good idea is normally perceived as not good at all until it's really good. If you have an alternative idea, you should never give up and try. And when you've tried and proved that it works, your surrounding will recognize, oh, you know, this was a really, really great idea, but it takes a lot of effort to get there. And the second one was from Mike Tyson. Everybody got the strategy up until they went in and get the first punch in the face.

And that's, you know, that's really something, you know, what do you do then? And that's, I think, that, you know, to continue going on when you're constantly being challenged, that is a very, very important thing.