Northvolt adds Volvo to its list of automotive partners

21 June 2021

Volvo Car Group (Volvo) intends to establish a joint venture with Swedish battery manufacturer, Northvolt.

As a first step in the new 50-50 joint venture (JV), the two companies will set up a research and development centre in Sweden. This is planned to begin operations in 2022. The centre will build on the battery expertise held by the partners and lead towards the development of ‘state-of-the-art’ cells and vehicle -integration technologies, specifically designed for use in Volvo and Polestar vehicles.

The JV will also see the establishment of a new gigafactory in Europe, with a potential capacity of up to 50GWh per year. Production is scheduled to begin in 2026. Volvo will also source 15GWh of battery cells per year from Northvolt’s plant in Skellefteå, Sweden starting in 2024. The first car to feature battery cells developed through the joint venture will be the electric successor to Volvo’s XC60 model.

Overview of major gigafactory projects in Europe*

‘By working with Northvolt, we will secure a supply of high-quality, more sustainable battery cells for our pure electric cars,’ said Håkan Samuelsson, chief executive at Volvo Car Group. ‘Working closely with Northvolt will also allow us to strengthen our in-house development capabilities.’

Fast progress

The announcement is the latest in a long line of releases by Northvolt in recent months. Since its inception in 2017, the startup has built R&D facilities and pilot lines, while its Skellefteå factory is expected to begin production of battery cells later this year.

The supplier already has a large order from BMW Group, with a value of around €2 billion. Volkswagen Group (VW) has a 20% stake in the business, having invested around €1.4 billion, and has placed a $14 billion (€11.7 billion) order for electrically-chargeable vehicle (EV) batteries.

With carmakers across the continent accelerating their electrification plans and developing more battery-electric vehicle (BEV) models, this latest announcement is unlikely to be the last. Alongside Northvolt, many established businesses and startups are planning or building gigafactories to take a share of the battery market.

Volvo itself has ambitious plans regarding the electrification of its fleet. The carmaker aims for 50% of sales to be BEV-derived by 2025, and by 2030 it will only sell BEV models. Its partnership with Northvolt will help it to achieve these goals.

Carbon-neutral future

The carmaker also has a commitment to reduce its carbon emissions. Volvo has recently announced a tie-up with steel supplier SSAB to investigate the use of fossil-free steel in its production process. The company is also aware of the issue of carbon emissions from battery manufacturing.

Working with Northvolt and purchasing batteries from its Skellefteå factory while the new plant is built means shortening the supply-chain logistics. Volvo has also stated that its gigafactory will be 100% powered by clean energy. The facility’s location is yet to be decided, but the carmaker states that it will employ around 3,000 people.

The battery manufacturer is also exploring ways of recycling battery materials to make them more sustainable, leading to a greener future for the technology.

‘Volvo Cars and Polestar are industry leaders in the transition to electrification and perfect partners on the journey ahead as we aim to develop and produce the world’s most sustainable battery cells,’ said Peter Carlsson, co-founder and CEO of Northvolt. ‘We are proud to become their exclusive battery-cell production partner in Europe.’