Volvo Cars seeks to takeover Northvolt's stake in Swedish battery venture

Volvo Cars, the Chinese-owned automaker, has announced that it is seeking to take over Northvolt's stake in their Swedish battery-making joint venture NOVO. The move comes as Northvolt, once hailed as Europe's best hope for a homegrown electric vehicle battery champion, battles to stay afloat amid production problems, the loss of a major customer contract, and a lack of funding.

The NOVO Energy battery cell plant was expected to cost 30 billion Swedish crowns (USD 2.8 billion) when it was first announced in 2021. Volvo Cars has so far invested around 3 billion Swedish crowns into the joint venture. However, the automaker stated that any future battery production at NOVO will be dependent on the involvement of a third-party or other partner, as Northvolt has decided not to contribute further capital to the venture "at this point in time."

Evan Hartley, an analyst at Benchmark Mineral Intelligence, believes Northvolt's decision to step back from the NOVO venture could be beneficial for the struggling battery maker, as it aligns with the company's recent efforts to streamline its ambitious plans. "On the flip side this again highlights a position in which a guaranteed customer of theirs is moving away from using Northvolt as a direct supplier," said Hartley.

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Europe's journey towards self-reliance in EV battery production, which is crucial for the continent's green transition and independence from Chinese manufacturers, has been marked by volatility. Several projects have been postponed or scrapped, underscoring the challenges faced by the industry.

Volvo Cars stated that the move would not impact its own vehicle roll-out plan, but the company declined to elaborate on potential partners to replace Northvolt in the NOVO venture. The automaker's decision comes as global automakers, including Volvo, have scaled back their electrification targets due to slowing demand for EVs, a lack of affordable models, slow rollout of charging infrastructure, trade tensions, and competition from cheaper Chinese rivals.

Northvolt, meanwhile, has said it is in talks with investors and lenders to secure funding and has made significant progress towards a financing deal. However, Volvo Cars CEO Jim Rowan recently stated that the company would not put any money into Northvolt.