Volvo and Northvolt finalise joint venture in battery push
14 December 2021
Volvo Cars and Swedish battery-maker Northvolt will open a joint research and development (R&D) centre in Gothenburg, which will kick off operations in 2022. It is part of a SEK 30 billion (€2.9 billion) investment in battery development and manufacturing.
Volvo’s battery push underlines its electrification efforts as the OEM strives for half of its sales to be made up of battery-electric vehicles (BEVs) by the middle of this decade. By 2030, it aims to sell only fully-electric cars. The partnership with Northvolt – whose biggest shareholder is Volkswagen Group (VW) – will help the manufacturer hit its target, while also bolstering Volvo’s own development capabilities.
The Swedish OEM said it is one of a few automotive brands to make battery-cell development and production part of its end-to-end engineering capabilities. VW recently signed agreements with several companies – including lithium developer Vulcan Energy and Belgian chemicals and recycling company Umicore – as it looks to further develop its in-house battery-cell development.
After announcing their partnership earlier this year, Northvolt and Volvo have now finalised their joint venture by officially signing an agreement. The aim is to develop the sustainable production of batteries for Volvo’s next generation of BEVs.
‘Our partnership with Northvolt secures the supply of high-quality, sustainably-produced batteries for the next generation of pure electric Volvos,’ said Håkan Samuelsson, chief executive for Volvo Cars. ‘It will strengthen our core competencies and our position in the transformation to a fully electric car company.’
The R&D centre is strategically located close to Volvo’s and Northvolt’s facilities to ensure developmental synergies. Alongside battery supply agreements, the partnership between the two companies will help secure European battery cell needs. Scandinavia is a key location for European production, with Northvolt aiming to develop the world’s greenest battery cell and create a sustainable supply chain on the continent.
Batteries made in Europe
Building the centre is only one aspect of the joint venture. The companies also plan to establish a new gigafactory in Europe, with a potential capacity of up to 50GWh per year – enough to supply batteries for half a million cars. Volvo did not reveal where this battery plant will be located, but it expects to make the precise location known early next year. Construction will commence in 2023 and production is due to start in 2026, with the site employing up to 3,000 people.
‘Volvo Cars is an excellent partner on the road towards building up a supply of battery cells that are made in Europe with a very low carbon footprint, and that are optimised through vehicle integration to get the best performance out of the next-generation electric vehicles,’ said Northvolt CEO Peter Carlsson, who co-founded the startup in 2016.
This year, Northvolt’s prominent shareholder VW invested $620 million (€549 million) in the company as part of a larger $2.75 billion funding round. The startup has also won over notable partners, including ABB, BMW Group, Scania, Siemens, Vattenfall, and Vestas.
The Swedish company recently announced it had produced its first fully-recycled battery cell, marking a milestone for Northvolt, which is eager to set new sustainable benchmarks in manufacturing. The battery-maker is set on taking on major Asian players, including CATL and LG Chem, as it plans for a 20% market share in Europe by 2030. The European Commission launched the European Battery Alliance in 2017 to help build a resilient supply chain, an imperative step for a clean-energy transition and building a competitive industry in the region.