Volvo Cars and Northvolt have closed a $3.3-billion deal that the automaker said secures its supply of sustainable, state-of-the-art battery cells for its next-generation full-electric cars.
The joint venture includes an R&D center, which will start operations in 2022, in Gothenburg, Sweden, making Volvo one of the few automotive brands to make battery cell development and production part of its end-to-end engineering capabilities, the automaker said in a statement. on Friday.
The battery R&D center will be joined by a new cell manufacturing facility that will produce powerplants for Volvo and its subsidiary, Polestar.
The two Swedish companies are in the final phase of selecting a location in Europe for the factory, which will have annual capacity of up to 50 gigawatt hours and the ability to supply batteries to half a million cars a year by 2026.
The exact location of the plant is expected to be confirmed in early 2022, with construction slated to start in 2023.
Volvo is investing heavily to become an electric-only brand by 2030. Part of that push was the 94-year-old's company's entry onto the Nasdaq Stockholm in October, a move that generated 20 billion kronor ($2.3 billion) to help fund Volvo's shift away from internal combustion engines.
"We are the No. 5 or No. 6 largest player when it come to the current global premium automotive segment. We want to be one of the top two or three in the future premium sector that will be electric," Volvo CFO Bjorn Annwall told Automotive News Europe after Volvo's trading debut.
Volvo aims to have sales of 1.2 million cars by 2025 and wants half of them to be full-electric models.
"Our partnership with Northvolt secures the supply of high-quality, sustainably produced batteries for the next generation of pure-electric Volvos," Volvo CEO Hakan Samuelsson said the statement. "It will strengthen our core competencies and our position in the transformation to a fully electric car company."
Northvolt CEO Peter Carlsson said the partners will build 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."