Volvo Cars seeks to oust Northvolt from EV battery venture

By Stine Jacobsen and Marie Mannes

STOCKHOLM (Reuters) - Volvo (OTC:VLVLY ) Cars is seeking to acquire Northvolt's stake in their Swedish battery-making joint venture and would need to find a further investor to keep plans for their gigafactory on track after Northvolt halted funding, it said on Wednesday.

Northvolt, once hailed as Europe's best shot at a home-grown electric-vehicle battery champion is racing to stay afloat by slimming down and cutting jobs, hobbled by production problems and a lack of funding.

Europe's journey towards self-reliance in EV battery production, crucial for its green transition and independence from Chinese makers, has been hit by volatility with numerous projects being postponed or scrapped.

Northvolt said separately it had decided not to contribute further capital to NOVO "at this point in time" and was in active discussions with Volvo Cars on the way forward for NOVO Energy.

A spokesperson for NOVO told Reuters as late as Friday that production was still on track to start in 2026. The company declined to comment on Wednesday.

Volvo Cars, majority-owned by China's Geely, formed the joint venture with Northvolt to build a gigafactory in Gothenburg in southwest Sweden, aiming to produce sustainable batteries for electric cars in 2021.

"Northvolt AB has not fulfilled its financing obligations," Volvo Cars said in a statement.

"Any battery production at NOVO Energy is dependent on third party or other partner involvement," it said, while adding this would not impact its vehicle roll-out plan.

A Volvo spokesperson declined to elaborate on potential partners.

The NOVO Energy battery cell plant was expected to cost 30 billion Swedish crowns ($2.8 billion), the companies said in 2021.

Volvo Cars has so far put around 3 billion Swedish crowns into the joint venture, the spokesperson said, declining to comment on whether it would pay anything for its partner's stake.

Global automakers including Volvo have scaled back their electrification targets, hurt by slowing demand for EVs amid a lack of affordable models, slow roll-out of charging points, trade tensions and competition from cheaper Chinese rivals.

Volvo Cars has battery supply deals with LG, CATL and Northvolt, it has previously told Reuters.

Northvolt has said it is in talks with investors and lenders to secure funding and has made significant progress towards a financing deal.



Volvo Cars CEO Jim Rowan said this month the company would not put any money into Northvolt.

($1 = 10.6381 Swedish crowns)

Source: Investing.com