Investors were very much plugged in to Freyr Battery (FREY -1.99%) stock on Tuesday. The next-generation battery maker's shares closed nearly 9% higher, in contrast to the slumping S&P 500 index, on news of a new deal signed by the company.
Freyr announced Tuesday morning that it has signed a sales agreement with energy storage solutions (ESS) company Nidec, under which the former company will supply 38 GWh worth of its battery cells from 2025 to 2030. On top of that, the two businesses will create a joint venture aimed at supplying industrial scale.
Freyr said that it could reap over $3 billion from the deal.
The battery cells will be produced in Frey's Giga Arctic factory, which is still under construction. The facility is located in the company's home country of Norway, and the company said the Nidec deal will provide financing to complete the construction.
The just-signed arrangement is an expansion of a previous conditional offtake agreement between Freyr and Nidec, under which Freyr was obligated to provide its partner 31 GWh of battery cells.
In addition to the battery cell supply, Freyr and Nidec agreed to establish a joint venture to pack Freyr's battery hardware into ESS solutions for industrial clients and utility operators.
Green power technology is the wave of the future, and with this splashy new deal Freyr now has a much better chance of riding this new wave. Nidec is a global leader in its business, and Freyr's reputation will surely be enhanced by the deepening partnership between the two companies. Investors were right to trade up the Norwegian company's stock on the news.