What happened
Freyr Battery (FREY -2.37%), the renewable energy stock that went public in August, shot through the roof in early trading on Thursday. Freyr gained as much as 13% at market open after the company announced a mega-deal. Although the stock lost momentum alongside the broader market as the day progressed, it was still trading up 3.4% as of 1:50 p.m. ET.
So what
Freyr, which aims to build lithium-ion battery cells and is targeting 43 gigawatt hours (GWh) of battery cell production by 2025 from a facility under construction in Norway, announced its first major offtake agreement with an undisclosed energy storage systems (ESS) manufacturer on Dec. 16.
Image source: Getty Images.
Under the agreement, Freyr will deliver at least 31 GWh of battery cells between 2023 and 2028 to the company, worth around $3 billion in revenue over the five-year period. Freyr claims the partner is one of the world's largest players in the global ESS market.
"Announcing our first significant offtake agreement is a major milestone. This development advances us toward a final investment decision, the start of construction on our initial gigafactories, and industrial-scale commercialization of Freyr's clean battery cells," said Freyr CEO Tom Jensen.
Now what
In December 2020, Freyr licensed Massachusetts-based 24M Technologies' semi-solid lithium-ion battery technology for use in its cells. 24M, which uses larger and thicker electrodes in batteries to deliver higher energy density at low costs, recently struck a partnership with Volkswagen Group to manufacture lithium-ion batteries for its electric vehicles.
That partnership between 24M and Volkswagen sounds promising, and is one of the major reasons Fryer shares have been rising in December so far, given that Fryer will use the same technology as 24M. Although Freyr is a very young company that's still years away from commercial production, today's offtake agreement seems to have caught the attention of more investors willing to risk their money on pretty much any stock that's a bet on hot sectors like electric vehicles.
