Swedish auto manufacturer Volvo Cars and Swedish battery developer Northvolt are investing SEK 30bn (£246 million) to open a new battery manufacturing research and development (R&D) centre in Gothenburg next year.
The R&D centre will supply sustainably produced batteries for the next generation of pure electric Volvo cars.
Once built, Volvo will become one of the few automotive brands to make battery production part of its end-to-end system.
This deep vertical integration is important as batteries are the biggest cost component in an EV and are a major part of the carbon footprint.
Peter Carlsson, chief executive of Northvolt, said: “Volvo Cars is an excellent partner on the road towards building up a supply of battery cells that are made in Europe with a very low carbon footprint, and that are optimised through vehicle integration to get the best performance out of the next-generation EVs.”
The joint R&D centre will be situated close to Volvo Cars’ own R&D operations and to Northvolt’s existing innovation campus, Northvolt Labs, to make the development of battery technologies as efficient as possible.
Both companies also plan to build a new manufacturing plant in Europe with the exact location to be confirmed in early 2022.
It is estimated that around 3,000 people will be employed at this plant and that it will supply batteries for around half a million cars per year, giving an annual capacity of up to 50GWh.
Construction will begin in 2023, with large-scale production set for 2026.
Volvo’s new partnership with Northvolt is key to achieving its aim of becoming a global leader in the premium electric car market and sell only electric vehicles by 2030.
The XC40 Recharge Twin AWD was Volvo’s first foray into pure BEVs, with the C40 next in line for release.