Northvolt Sells US Battery Plant to California Startup

(Lyten via YouTube)

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Northvolt AB, the cash-strapped European battery maker, reached a deal to sell its U.S. factory to a startup that’s trying to reduce America’s reliance on China for batteries.

Lyten, a California startup developing lithium-sulfur batteries, will invest $50 million over the next several years as part of an agreement to buy battery manufacturing equipment from Northvolt, take over its building lease, and expand the facility near San Francisco to integrate it with its operations in nearby San Jose.

Northvolt, once seen as a potential rival to the Chinese firms that dominate the EV battery market, has been rushing to line up more than $900 million to meet long-term capital needs after several missteps left it fighting for survival. Meanwhile, Lyten, which has raised more than $425 million from investors, wants to use sulfur, which is cheap and abundant, to make U.S. battery production more feasible and competitive.

Lyten got a boost last year from a law that bans the Defense Department from buying batteries produced by China’s biggest manufacturers, which is part of a push to decouple the Pentagon’s supply chain from its geopolitical rival.

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The NorthVolt AB research and development center in Vasteras, Sweden. (Mikael Sjoberg/Bloomberg News)

The startup is acquiring the Northvolt plant to prepare for a much bigger gambit — a $1 billion factory near Reno, Nevada. That facility is projected to begin the first phase of production in 2027 and eventually achieve annual capacity of 6 to 10 gigawatt hours of batteries for markets spanning drones and satellites for the defense industry, to scooters and e-bikes.

The company has already built a “world-class” manufacturing line, said Michael Sanders, an analyst at battery research firm Avicenne Energy. The firm “should be looked at in a serious manner.”

The startup is still in the process of raising money for the Reno plant. A little less than half of the $1 billion for the factory is expected to come from equity financing. It plans to get the remaining funds through debt and grants, including public infrastructure bonds, loans from the Department of Energy and funding mechanisms in the Inflation Reduction Act, President Biden’s signature climate legislation.

But the company’s plans may face new hurdles, with President-elect Trump vowing to repeal parts of the IRA, which created incentives for automakers to make more electric models and spurred investment in domestic battery development.

Lyten CEO Dan Cook said the firm’s technology will remain relevant under Trump because it’s not targeting EVs at this stage, and using sulfur eliminates the need for supply chains tied to China. He said the company has support from Republicans because it’s aligned with their defense policies, and also is creating manufacturing jobs.

“It’s bipartisan,” Cook said. “We hit the golf ball right down the middle here.”

Still, the startup has a lot to prove, both in securing financing to build its Nevada plant and making lithium-sulfur batteries at scale. Over the past year, several battery startups failed to cross the chasms from lab samples, to pilot lines, to mass production, with Northvolt being the latest example.

The manufacturing facility being taken over by Lyten was previously operated by Cuberg, a battery startup acquired by Northvolt in 2021 that focused on lithium-metal batteries for e-scooters and e-bikes. Last year, Cuberg and Northvolt tried to expand into electric-powered air travel. But this August, Northvolt closed the facility and consolidated research and development, laying off about 200 employees.

Batteries have two main components — a cathode and an anode — and an electrolyte that helps shuttle a charge between them to generate power. The materials used determine how much energy batteries can store and at what cost.

Lyten developed a sulfur-based cathode and lithium-metal anode that makes the batteries lightweight and energy dense, which reduces costs. The company does this by manipulating carbon atoms with nanotechnology. That can help lithium-sulfur be competitive with the nickel-based batteries favored in the U.S., and outperform the lithium iron phosphate, or LFP, batteries favored in China.

One market Lyten isn’t targeting right now is electric vehicles, according to Celina Mikolajczak, the firm’s chief battery technology officer and a Tesla Inc. veteran. The Nevada factory will start off supplying smaller-volume markets that are willing to pay more of a premium than automakers that “drive their costs down to nothing.”