Sweden's Volvo, Northvolt to build gigafactory

Two Swedish companies, automaker Volvo Car Group and battery maker Northvolt, will join forces to build a 50 GWh/year gigafactory planned to start production in 2026.

The companies said June 21 they intended to set up a 50/50 joint venture to develop and produce more sustainable batteries to power the next generation of pure electric Volvo and Polestar cars.

The JV will initially set up a research and development center in Sweden to start operations in 2022, which would be followed by the construction of the gigafactory.

The R&D center will be aimed at building on the battery expertise of both companies and develop next-generation, state-of-the-art battery cells and vehicle integration technologies.

The gigafactory is planned to be powered by 100% clean energy, with the location yet to be decided.

Volvo also plans to source 15 GWh/y of battery cells from 2024 from Northvolt's Ett battery plant under construction in Skelleftea, Sweden.

"A partnership with Northvolt will secure the European battery cell needs that will drive Volvo Cars' ambitious electrification plans," said Volvo, which is aiming for 50% of sales to be electric vehicles by 2025 and for all sales to be EVs by 2030.

Volvo said it could also reduce the environmental footprint attributable to battery sourcing and production for its future cars by working with Northvolt.

"By working with Northvolt we will secure a supply of high-quality, more sustainable battery cells for our pure electric cars," Volvo CEO Hakan Samuelsson said, adding that the partnership would also allow the automaker to strengthen its in-house development capabilities.

Volvo head of industrial operations and quality Javier Varela said collaborating with Northvolt was "an important step for our industrial network as we move towards all-out electrification by 2030".

Partnering with Northvolt would ensure "an efficient and cost-effective supply chain of high-quality and sustainable batteries in Europe", Varela said.

The JV is the latest move by an automaker to secure battery supply for its EV plans.

Volkswagen said in March it planned to build six battery factories in Europe with total production capacity of 240 GWh/y, with Northvolt as VW's main partner in the first two 40 GWh/y factories at Skelleftea in Sweden and Salzgitter in Germany, which are planned to start production in 2023 and 2025, respectively.

Northvolt said June 9 it had raised $2.75 billion to expand its battery manufacturing capacity in Europe to meet growing demand for electric vehicle batteries and help the EU achieve its "Green Deal" objectives.