Volvo to Take Ownership of Northvolt Battery Joint Venture
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Volvo Car AB is taking over a joint venture with financially struggling Northvolt AB to build a factory on Sweden’s west coast, underscoring the major challenges of scaling battery production in the electric vehicle market.
In a surprise move, the carmaker on Oct. 30 announced plans to invoke its redemption rights to take full ownership of the NOVO Energy project as Northvolt has failed to fulfill its financing obligations.
“This action follows a breach of the parties’ shareholders’ agreement,” Gothenburg-based Volvo said in a statement. Spokeswoman Kristin Boldemann Wester declined to comment on any of the financial details connected to the change of ownership.
Volvo also said any future battery production at the site would be dependent on “third-party or other partner involvement,” indicating it has no plans to start making batteries by itself. Whether the partner that will operate the factory is Northvolt or someone else “has not been decided,” Wester said by phone.
Cash-strapped Northvolt said separately that it would not contribute further capital into the joint venture and would instead prioritize its remaining sites in Sweden, as well as the planned factories in Canada and Germany.
“We remain in active and constructive dialogue with Volvo Cars on the way forward for NOVO Energy,” spokesman Martin Hofelmann said in emailed comments.
The setback to Northvolt comes amid a persistent liquidity crisis after a production ramp-up faltered at its main plant near the Arctic Circle in Sweden, depleting cash levels while it continued to incur costs from scaling up. To get its finances on a more stable footing, Northvolt is on track to complete an emergency funding round next week totaling about $300 million, according to a person familiar with the matter.
Northvolt has in recent weeks communicated a wider pullback across Europe and North America, where the battery maker had hoped to build the manufacturing breadth needed to compete with lower-cost Chinese producers. Those expansion plans are now in tatters amid a string of operational setbacks and cooling demand for electric vehicles in key markets.
Volvo had entered the partnership with Northvolt in 2021 with a 50% stake. The companies selected Gothenburg as a location for the 30 billion-krona ($2.8 billion) investment into the plant to make cells for Volvo’s new fully electric models.
Construction began in March with a target nameplate capacity set at as much as 50 gigawatt hours, equal to batteries for about half a million EVs a year. Production had been due to begin in 2026, the firms said at the time.
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The timeline for production start is currently being evaluated and “there are different future scenarios,” Volvo’s Wester said. The carmaker has so far invested 3 billion kronor into the project, she added.
Volvo, controlled by China’s Zhejiang Geely Holding Group Co., last month scrapped a plan to sell only fully electric cars by the end of this decade, joining several peers in walking back its EV ambitions due to waning demand. Northvolt’s biggest shareholder, Volkswagen AG, posted its lowest profit margin since the pandemic on Oct. 30 as it makes plans to close three German factories and slash wages.
