Volvo Cars, owned by China’s Geely Holding Group, will establish a joint venture (JV) with Swedish battery maker Northvolt to develop electric vehicle (EV) batteries, as reported by Yahoo Finance on June 21. The 50-50 JV will open a research and development (R&D) center in Sweden for sustainable car batteries in 2022 and build a factory with a potential annual manufacturing capacity reaching 50 gigawatt-hours (GWh) in 2026. The new batteries will power the next generation of Volvo and Polestar EVs and support Volvo’s plan of achieving climate neutrality by 2040. In addition, the new factory planned by Volvo and Northvolt will utilize 100% renewable energy.
The new partnership follows the electrification trend in the automotive industry aiming to reduce greenhouse gas (GHG) emissions. Many auto manufacturers have announced plans to accelerate the development and production of EVs. For example, on May 26, Ford [F:US] outlined its plan to ramp up investment in EVs to USD30bn by 2025 and projected 40% of its global sales to be all-electric vehicles by 2030. Similarly, GM [GM:US] said on June 16 that it will boost investment in electric and autonomous vehicles to USD35bn through 2025. In a more ambitious plan than Ford and GM, Volvo aimed to transition to all-electric fleets by 2030. Furthermore, the company recognized that electrification alone was not enough and has committed to reducing GHG emissions throughout its operations, manufacturing process, and supply chain.
The JV is hardly the first investment in EVs for either Volvo or Geely Automobile [0175:HK], another affiliate under Geely Holding Group. Both companies have announced multiple projects this year in the field of EV development. At the beginning of this year, Geely Automobile introduced its plans to establish JVs with electronics manufacturer Foxconn [2354:TW] and tech giant Baidu [BIDU:US] to accelerate the R&D of electric and autonomous cars. Later in March, Volvo announced its investment in Driivz, a global EV charging software company, to develop charging platforms for electric trucks. In the same month, Geely Automobile launched the RMB2bn luxury EV brand Zeekr targeting China’s domestic EV market. While Geely Automobile was the largest Chinese passenger car maker, selling 1.32m units in 2020, the firm’s new energy vehicle (NEV) sales dropped nearly 40% YoY to 68,000 units last year. The back-to-back investments and partnerships reflected the automaker’s transition effort in the fast-growing EV market. In addition, Volvo also announced on March 2 to only produce NEV models from 2025 with 50% of battery electric vehicles (BEV), and become a luxury BEV company in 2030.