Yahoo Finance Volvo signs Gigafactory deal with Swedish electric battery maker Northvolt
Volvo has announced a partnership with Swedish electric battery maker Northvolt on Monday as part of the company’s bid to sell electric-only cars by 2030.
The move will see the build of a new battery gigafactory in Europe and the development of energy cells for Volvo’s electric-only sister brand Polestar.
The plant will have a capacity to produce up to 50 gigawatt hours (GWh) per year to start production in 2026. This is equivalent to batteries for around 500,000 cars.
The companies will also set up a research and development centre in Sweden next year to start developing batteries purely for Volvo.
Volvo, which is owned by China's Geely Holding (0175.HK) has not yet revealed the location of the plant in Europe, however, it is expected to employ about 3,000 people and will be powered by clean energy.
The first car to feature battery cells developed through the joint venture will be the electric successor to Volvo Cars’ best-selling XC60 model.
The deal has yet to be signed and approved by the boards of Volvo and Northvolt.
"Working closely with Northvolt will also allow us to strengthen our in-house development capabilities," said Håkan Samuelsson, chief executive at Volvo Car Group.
He also told the FT: “It’s important to be in the lead. If you’re late in this race, it will be tough to get the talent...this is not something we do because it looks good or sounds good. This is a new core competence for Volvo.”
Read more: Electric vehicles may be 'the biggest change in the 100-year plus history' of the auto industry
Northvolt, which was founded by former Tesla (TSLA) executives, is backed by investors including Volkswagen (VOW3.DE), its largest shareholder, and Goldman Sachs (GS). It has also got contracts worth billions from BMW and Scania, and is currently valued at about $12bn (£8.7bn).
The Swedish firm raised $2.75bn in equity earlier this month to expand capacity at a factory it is constructing in its home country.
“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.”
It comes as carmakers across the globe are looking to get access to enough batteries for electric cars, with VW alone planning six gigafactories. Battery makers are scrambling to keep up with demand amid a shift to electric from petrol and diesel to reduce carbon emissions.
Volvo is looking to sell 50% pure electric cars by the middle of the decade, and has pledged to sell fully electric cars by 2030.
Watch: In Europe, hybrid cars no longer the green choice
