Volvo signs deal for battery cell R&D centre

Volvo signs deal for battery cell R&D centre

Business news |
By Nick Flaherty

Volvo Cars and battery startup Northvolt have signed a binding agrement to create a joint research and development (R&D) centre in Sweden. This is part of a SEK 30bn (E3bn) investment in battery development and manufacturing for the next generation of pure electric Volvo cars.

The R&D centre in Gothenburg will open in 2022 and will create a few hundred jobs. This positions Volvo Cars, owned by Geely of China, as one of the few automotive brands to make battery cell development and production part of its end-to-end engineering capabilities. The R&D centre will be close to to Volvo’s R&D operations and to Northvolt’s existing innovation campus Northvolt Labs in Västerås, Sweden, ensuring synergies and efficiencies as it develops battery technologies.

The R&D centre will be followed by the construction of a new manufacturing plant in Europe to produce the cells for the next generation pure electric Volvo and Polestar cars. The exact location of the plant is expected to be confirmed in early 2022.

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“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 partnership will focus on developing tailor-made batteries that give Volvo drivers what they want, such as range and quick charging times. Volvo Cars is working with Northvolt to create a true end-to-end system for batteries, whereby it develops and builds the batteries itself. This deep vertical integration is important since the battery represents the largest individual cost component in an electric car, as well as a major part of the carbon footprint.

“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 optimized through vehicle integration to get the best performance out of the next generation EVs,” said Peter Carlsson, chief executive for Northvolt.

The two are in the final phase of a selection process to find a suitable location in Europe for the battery cell manufacturing plant with an annual capacity of up to 50 gigawatt hours (GWh). This would supply batteries for approximately half a million cars per year and will start construction in 2023 with large scale production in 2026, and is expected to employ up to 3,000 people.

Alongside battery supply agreements, the partnership with Northvolt secures the European battery cell needs that are part of Volvo’s electrification plans. It aims to sell 50 per cent pure electric cars by the middle of this decade, and by 2030 it aims to sell only fully electric cars.

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