Volvo Cars and Northvolt will open a joint research and development (R&D) centre in Gothenburg as part of a SEK 30 billion (£2.5 billion/$3.3 billion/€2.9 billion) investment in electric vehicle (EV) battery development and manufacturing.
The R&D centre, which will become operational in 2022, will also create several hundred jobs in Gothenburg. As a result, it will position Volvo Cars as one of the few automotive brands to make battery cell development and production part of its end-to-end engineering capabilities.
Following the partnership announced by both companies earlier this year, Volvo Cars and Northvolt have now signed a binding agreement this week to create a joint venture. This is for the development and sustainable production of batteries for the next generation of pure electric Volvo cars.
The establishment of the new R&D centre in Gothenburg will be followed by the construction of a new manufacturing plant in Europe. It will produce next-generation state-of-the-art battery cells, specifically developed for use in next-generation pure electric Volvo and Polestar cars.
The exact location of the new plant is expected to be confirmed in early 2022. The R&D centre will be close to Volvo Cars’ own R&D operations and to Northvolt’s existing innovation campus, Northvolt Labs, in Västerås, Sweden, ensuring synergies and efficiencies as it develops battery technologies.
Håkan Samuelsson, Volvo Cars chief executive, said: “Our partnership with Northvolt secures the supply of high-quality, sustainably produced batteries for the next generation of pure electric Volvos. 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 offer a good range with 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.
Peter Carlsson, Northvolt chief executive, said: “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 optimised through vehicle integration to get the best performance out of the next-generation EVs.”
As for their joint battery plant, Volvo Cars and Northvolt are in the final phase of a selection process to find a suitable location in Europe. The plant will have a potential annual capacity of up to 50 gigawatt hours (GWh), which would supply batteries for approximately half a million cars per year.
It 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 Cars’ ambitious electrification plans. It aims to sell 50 percent pure electric cars by the middle of this decade, and by 2030 it aims to sell only fully electric cars.