Volvo Plans to Acquire Stake in EV Battery Joint Venture

Volvo Cars has announced its intention to acquire a stake in Northvolt, a joint venture focused on battery production for electric vehicles (EVs). This move comes after Northvolt has faced challenges such as production issues, the loss of a significant customer contract, and financing difficulties. These circumstances have led to efforts to downsize and job losses at Northvolt.

The Swedish car manufacturer, owned by China's Geely, is now seeking a new partner to maintain momentum for its planned gigafactory, which is critical for Volvo's EV production. The NOVO Energy gigafactory located in Gothenburg, Sweden, was initiated in 2021 at an estimated cost of 30 billion Swedish krona (2.8 billion USD). Despite recent developments, Volvo Cars has confirmed that its vehicle launch plans will not be impacted.

Northvolt has chosen not to invest further capital into NOVO and is in discussions with Volvo Cars regarding the future of the venture. Evan Hartley, an analyst from Benchmark Mineral Intelligence, views Volvo's potential acquisition as a strategic move that would allow the battery manufacturer to streamline its operations. However, Hartley also noted that this shift for Volvo could mean distancing itself from Northvolt as a direct supplier.

Volvo Cars has established battery supply agreements with several major suppliers, including LG, CATL, and Northvolt. A spokesperson for NOVO stated last Friday that production is still set to commence in 2026, but declined to provide further comments on Wednesday.

So far, Volvo's investment in the joint venture has reached approximately 3 billion Swedish krona, and the company has not disclosed whether it will compensate Northvolt for its stake.

The broader automotive industry is facing challenges in EV adoption due to slowing demand caused by various factors, including commercial tensions and competition from more affordable Chinese brands. In response to these challenges, some automakers have adjusted their electrification targets.

Northvolt is currently negotiating new financing and reported significant progress towards finalizing a financing agreement. Volvo Cars CEO Jim Rowan stated earlier this month that the company would not be investing additional funds into Northvolt.

The mentioned exchange rate is 1 USD = 10.6381 Swedish krona.