Swedish-Chinese car maker VOLVO and Swedish Li-ion battery manufacturer Northvolt announced on February 4 that they have selected the Swedish city of Gothenburg as the site of a new jointly-developed gigafactory. Once completed, the Gothenburg plant will have a maximum annual production capacity of 50GWh and employ around 3,000 workers. This story was first reported by various new agencies including Bloomberg and CNBC.
VOLVO and Northvolt entered into a strategic alliance in 2021. Last December, the two companies signed a binding agreement to form a joint venture. The new entity is going to pursue the development and sustainable production of batteries that power the pure electric vehicles under VOLVO’s brands. The agreement also entails the establishment of an R&D center in Gothenburg and the construction of a gigafactory at a site that had yet to be determined at that time.
Now, Gothenburg has again been chosen as the location for the battery plant because of its close proximity to the R&D center and VOLVO’s largest car manufacturing plant in Sweden. Moreover, the city serves as the longtime headquarters of the car maker. There are other advantages such as existing infrastructure, access to renewable energy, and relevant job competences of the local labor force. This entire joint investment project, which encompasses the R&D center and the gigafactory, is estimated to worth around SEK 30 billion (USD 3.29 billion).
Established in 1927, VOLVO has been a major player in the luxury segment of the global car market. It was acquired by Ford in 1999, and then Ford sold it to Chinese automotive company Geely in 2010. The latter deal, which valued at USD 1.8 billion, remains the largest overseas acquisition made by a Chinese automotive company.
As for Northvolt, it finished building Europe’s first gigafactory in the Swedish city of Skellefteå in December 2021. Known as Northvolt Ett, this gigafactory manufactures Li-ion battery cells, prepares active materials, and recycles used batteries. Powered 100% by renewable energy, Northvolt Ett has an initial annual production capacity of 16GWh and will eventually reach 40GWh. This project was developed with the financial support from the European Investment Bank.
Regarding the new gigafactory that will be built in Gothenburg. It is expected to become one of the largest battery manufacturing plants in Europe. The construction of the Gothenburg gigafactory is scheduled to begin in 2023 and finish in 2025. Once operational, this plant can ramp up to 50GWh per year, which is sufficient to meet the demand from 500,000 electric cars per year. The batteries produced by the plant will be specifically tailored for the vehicle models under VOLVO and its sub-brand Polestar. VOLVO also announced this February that it has appointed former Tesla executive Adrian Clarke as the head of this joint venture.
VOLVO has repeatedly stated that it aims to manufacture and sell only electric cars by 2030. Its partnership with Northvolt will undoubtedly contribute to its efforts in achieving this goal. The company also recently reported that its car sales came to 47,561 vehicle units this January. Of that total, more than 30% were “electrified”.