Volvo and Northvolt outline a sustainable future

After the Volvo Car Group became the first OEM in Europe to announce a complete move away from the internal combustion engine by 2030, the next step now follows: In a joint venture with the likewise Swedish battery manufacturer Northvolt, a battery cell factory with a potential capacity of up to 50 GWh per year is to be built. These are to be used primarily in the company's own models.

What was rumored for several months has been legally binding since the end of 2021: The Volvo Car Group and Northvolt are jointly founding a joint venture with a volume of more than three billion US dollars, in which both parties will each hold a 50% stake. The central concern of the cooperation partners is the construction of the new Ett battery cell factory, which will have an annual capacity of up to 50 gigawatt hours and will equip the electric vehicles of Volvo and its subsidiary Polestar - starting in 2026. Although the exact location is still under discussion, it has already been decided that the products manufactured there will be specifically tailored to power the Group's next generation of pure electric vehicles. However, the first step will be the implementation of a research and development center in Gothenburg, which is scheduled to start operations in 2022.

Volvo is taking the transformation to electromobility particularly seriously, as the company demonstrated at the beginning of 2021 when it decided to phase out the production of vehicles with combustion engines - including hybrids. With the cells developed in-house, the dependence on external supplies is now also to be ended; in addition, customers are to be offered exactly what they demand, namely short charging times and a long range. The Northvolt factory in Skellefteå in northern Sweden, which will come on stream at the end of 2021, will contribute 15 gigawatt hours of battery cells per year from 2024 to meet European demand. This will increase steadily; after all, the company has set itself the goal of selling 50% pure electric cars by 2025. In addition, Polestar plans to develop the first vehicle that is completely climate-neutral in both production and operation as part of the "Polestar 0" project.

The Swedish partners want to refute the argument that the production of batteries for electric cars often has little to do with climate neutrality, but on the contrary is responsible for a large proportion of the total carbon emissions in the life cycle of a vehicle: The geographical proximity between battery and vehicle production is intended to reduce the ecological footprint, and the new factory is also to be powered entirely by renewable energies. The benefits are also emphasized by Håkan Samuelsson, CEO of the Volvo Car Group: "By working with Northvolt, we will secure the supply of high-quality and more sustainable battery cells for our pure electric cars."

Volvo is by no means the only OEM to have recognized the potential of Northvolt, led by CEO Peter Carlsson. Volkswagen also invested a further $620 million in the company in 2021, keeping constant its own stake of around 20%, which has been in place since summer 2019. The funds are to be used, for example, for capacity expansion in production, recycling, research and development, and an expansion of production capacity in Skellefteå is also planned. BMW and Swedish commercial vehicle manufacturer Scania are also among the customers for the Northvolt battery cell, which is incidentally the first to be manufactured entirely - from design to development and assembly - in a European Gigafactory. For the European automotive industry, this is an important step in reducing dependence on Asian manufacturers and thus also the risk of unforeseeable delays in the supply chain. Northvolt CEO Carlsson comments as follows: "Of course, this first cell is just the beginning. We look forward to Northvolt Ett greatly expanding its production capacity in the coming years to enable the European transition to clean energy."

A joint venture between Volkswagen and Northvolt, established back in 2019 to build and commission a battery cell factory in Salzgitter, Lower Saxony, was fully taken over by the Wolfsburg-based company in early 2021. This is intended to establish the Group's position as the world's largest manufacturer of electric vehicles in the long term.

The joint steps taken by Northvolt and Volvo or Volkswagen have the potential to revolutionize the European automotive market. As is now common practice within the industry, the long-term goal is to outstrip Tesla, the permanent competitor from California. The battery cells "made in Sweden" should set the course for this.