A Nordic Upstart Aims To Leapfrog Tesla And Other Battery Rivals With Lower-Cost, High-Tech Cell

Tesla CEO Elon Musk has promised dramatic changes in how his company makes batteries that power its electric vehicles and stationary energy storage packs. It’s now working to develop next-generation lithium-ion cells that are cheaper and more energy-dense. But he’s hardly alone in this effort. Big competitors like General Motors and China’s BYD and CATL have their own breakthrough battery plans, and so does ambitious Norwegian startup Freyr.

Named for the Norse god of fertility, Freyr thinks it’s got a shot at becoming a global battery powerhouse by using a highly automated production system for battery cells utilizing a new design that’s easier to manufacture. It opened a small-scale factory line this week in Mo I Rana, Norway, to start making “SemiSolid” lithium-ion cells and intends to have two multibillion-dollar plants—Giga Arctic in Norway and Giga America near Atlanta, Georgia, capable of churning out a combined 50 gigawatt-hours of batteries–running by 2025.

“If we can produce at gigawatt-hour scale we will have costs that are 25% lower than conventional battery production,” Tom Einar Jensen, Freyr’s CEO and cofounder, told Forbes. “The reason for this is that the production process is dramatically simplified. We’re moving from 17 steps in a conventional production system down to eight, which means less steel, less aluminum, less casing, less housing, less everything. So capex goes down by 50% or more, energy consumption goes down by 60% or more. The space of the facility is reduced by 80% on a per gigawatt hour basis, and we can produce three times as many batteries per employee relative to conventional facilities.”

Freyr, which started listing shares on the New York Stock Exchange in 2021 via a SPAC merger, isn’t yet generating revenue. With a market cap of just over $1.1 billion, it’s joining an intense cleantech competition with far bigger, better-funded companies, including Tesla, GM, BYD, CATL, Panasonic, Ford and LG Chem, all of which are pouring billions of dollars into new battery production facilities around the world. But transitioning the transportation industry to electric power from carbon-spewing fossil fuels and developing better, more affordable options for large-scale storage of renewable electricity also creates a massive business opportunity for new players that can deliver on big promises.

The large pouch cells Freyr is producing—bigger than either the cylindrical 2170 lithium-ion cells in Tesla’s battery packs or the beercan-size 4680 cells it’s shifting to—rely on technology licensed from battery startup 24M that Massachusetts Institute of Technology professor Yet-Ming Chiang developed. And unlike Musk’s EV company, Jensen says Freyr initially targets energy storage and commercial vehicle markets rather than battery-powered passenger vehicles.

“We’ve started out focusing on energy storage applications because that’s the sweet spot of the technology. We’ve already signed more than 130-gigawatt hours worth of demand through firm offtakes and conditional off-take contracts” he said.

“We’ve started out focusing on energy storage applications because that’s the sweet spot of the technology.”

Freyr also has an initial contract to supply batteries for a maker of electric buses and vans that he didn’t identify. The company will expand into the broader electric vehicle market eventually but sees batteries for energy storage as especially attractive.

“We could be selling batteries to the energy storage market any day of the week and twice on Sunday and not really focus on EVs,” Jensen said. “But we are because we can adapt this technology also to the electric vehicle market.”

IRA’s Appeal

The Inflation Reduction Act, or IRA, that became law last year, which provides the biggest investments and incentives for clean energy and electric vehicles in U.S. history, also altered Freyr’s initial strategy. The legislation enticed it to announce its Georgia plant last November to take advantage of federal incentives for domestic battery production. That $1.7 billion facility will be built on 368 acres of land in Coweta County and employ 720 people when fully ramped up to produce up to 34 GWh of lithium-ion cells annually.

“We were getting ready for that (plant) and then we accelerated into it,” Jensen said. “The IRA is generating additional interest for us to accelerate into the incentive pool.”

Equity analysts remain generally upbeat about the company’s prospects, though shifting to mass-scale production will be a test. “As we look out into the next five years, there are numerous milestones that the company needs to pass to begin generating revenues such as: winning customer orders, building the plants, hiring the right people, starting production and thereafter harvesting 24M’s semi-solid battery technology,” JP Morgan analyst Jose Asumendi said in a recent note. “Clearly, there is significant execution risk in the equity story.”

For now, Jensen thinks less about benchmarking Freyr’s success relative to Tesla than against rival Scandinavian battery startup Northvolt.

“We were founded in 2018 inspired by Northvolt, the Swedish battery maker just across the border when it decided to build batteries in Sweden. As good Norwegians, we tend to think that if the Swedes can do it, we can do it a little bit better,” he said wryly.

Shares of Freyr rose about 13% in New York to $8.34 on Wednesday.