Battery startup Freyr signs $3 billion supply deal with Nidec

Image: Freyr

Freyr Battery SA and Nidec Corp., the world’s largest manufacturer of high-efficiency electric motors, signed a binding deal for lithium-ion batteries from Freyr’s arctic giga-factory.

The volume totals 38 gigawatt-hours and equates to projected revenues of more than $3 billion for Freyr, the Norwegian company said in a statement on Tuesday. The companies are converting and expanding a previously announced 31 gigawatt-hour conditional off-take agreement to a binding sales agreement running from 2025 to 2030.

Freyr, which started trading last year on the New York Stock Exchange, is building its first lithium-ion battery factory in the far north of Norway and has announced plans for production in Finland and the US. It entered a joint venture agreement with Koch Strategic Platforms in 2021 and another with Aleees earlier this year as it seeks to establish itself in the battery supply chain.

Freyr and Nidec also agreed to cooperate in using Freyr’s next-generation battery cells with modules and packs into integrated downstream energy storage system solutions for industrial and utility grade customers, they said.

“What this joint venture is about is a tailor-made ESS solution leveraging larger and thicker cells that are more tailor-made for energy storage applications,” Freyr Chief Executive Officer Tom Einar Jensen said in an interview. “We will partner along the value chain with leading companies to ensure that we can be the industrialization partner of choice.”

The multi-year sales deal covers an increasing volume over time with a pricing structure linked to the underlying price of the raw material, in particular, lithium carbonate and lithium hydroxide, Jensen said. Along with its role in the JV, pass-through mechanisms will ensure raw material price risk is passed on and will ensure the battery maker can stay profitable both at the cell production level and at the module and pack level, he said.

The agreement provides Nidec with predictable supply as it continues to grow its energy storage solution business, Laurent Demortier, the head of Nidec’s energy and infrastructure division, said in the interview. Freyr’s cell is adapted to the ESS market, with a manufacturing capacity in line with the Kyoto, Japan-based company’s needs and compatible with the US and European markets it supplies, he said.

Nidec had been buying batteries in the spot market that are largely designed for the automotive industry, which are more costly due to the smaller size of the units, Demortier said in a presentation on Tuesday.

“A battery for utility scale is a hundred times bigger than the one from the automotive,” he said. “We need to design products that will fit this industry — this growing industry.”

The deal includes an option to increase volumes to 50 GWh in the period and potentially add volumes beyond 2030, Freyr said.

(By Stephen Treloar)

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