Lithium-ion battery provider Northvold has obtained its latest financing via a private placement co-led by Volkswagen and also backed by Scania.

Sweden-headquartered battery producer Northvolt raised a $2.75bn private placement round, in which automotive manufacturers Volkswagen committed $620m. The round was co-led by investment bank Goldman Sachs’ Asset Management subsidiary, pension funds AP1, AP2, AP3, AP4 and Omers Capital Markets, a vehicle for pension fund manager Omers. The transaction also included commercial vehicle producer Scania, among many other investors. Both Volkswagen and Scania were returning investors. There have been other corporate investors backing the company in previous rounds, such as industrial technology and appliance manufacturer Siemens, energy utilities Skellefteå Kraft and Vattenfall, insurance firm Folksam and automotive manufacturer BMW.

Founded in 2016 as SGF Energy, Northvolt has developed lithium-ion batteries for use in electric vehicles in addition to portable electronics products such as drones. The batteries can be also used as storage of renewable energy. The financing will support the expansion of the company’s Gigafactory from a capacity of 40 GWh per year to 60 GWh per year. Northvolt is considering building two additional facilities by the end of this decade to meet the forecast surge in demand.

Northvolt forms part of the broader energy storage and renewable energy tech space which has seen heightened interest from many corporate investors over the past few years, as the GCV Analytics bar chart below shows. The number of corporate-backed deals last year reached 76, an all-time-high, and a total estimated capital of $2.3bn, up from an estimated $482m over 23 rounds in 2014. The renewable energy and energy storage tech are very capital intensive and require a longer investment horizon, which renders them not apt for all venture investors. Thus, it is a noteworthy surprise to see a financing round of this size raised by an emerging enterprise like this.