Volkswagen is investing 900 million euros in the Swedish battery manufacturer Northvolt. Part of the sum is earmarked for a planned joint venture between the two companies, another part goes directly to Northvolt.
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In the course of the year, an equal-involvement joint venture is to be established. The aim is to set up its own battery cell production with Northvolt technology at the VW Salzgitter site in Lower Saxony, Germany. Provided that the framework conditions are met, the plant is to be built from 2020 in order to start battery cell production at the turn of the year 2023/2024. Production is to be 16 GWh in the first year and expanded to 24 GWh in the following years.
Subject to an antitrust review, the Wolfsburg company will also receive a seat on the Northvolt Supervisory Board for its 20 per cent stake. It is still unclear how much Volkswagen has paid for the shares and what amount will flow into the joint venture.
The Group is satisfied with their new European partner. “With Northvolt, we have found a European partner whose know-how and sustainable, CO2 optimised battery cell production processes will enable us to advance cell production here in Germany,” says Stefan Sommer, Member of the VW Board of Management responsible for Procurement. “The prerequisite for this is, of course, the creation of the political framework“.
With the planned capacity, however, Volkswagen will only be able to serve a small part of their own electric car production’s demand. If the Group follows its current electrification strategy, it will have an annual demand of over 150 GWh in Europe by 2025. Similarly, large quantities of battery cells will likely also be needed in Asia. The purchase of cells from Asia will therefore inevitably continue on a large scale.
There had recently been speculation about closer cooperation between Volkswagen and Northvolt. In May, it was reported that Volkswagen would expand its cooperation with Northvolt in the field of battery research, which it had concluded in March, in order to set up a joint production facility. Salzgitter was then discussed as a potential for VW’s cell production.
In addition to Volkswagen, other companies have also invested in the Swedish company: Northvolt completed a $1 billion capital roundup for the construction of its planned cell factory in Skellefteå, Sweden. The fresh capital comes from Volkswagen, Goldman Sachs, BMW, AMF, the Folksam Group and the IMAS Foundation.
Northvolt plans to set up its own production facility in Sweden independently of Salzgitter. Construction work on the cell factory, which will initially have an annual production capacity of 16 GWh and will later be expanded to at least 32 GWh, is scheduled to begin in August. Northvolt’s industrial partners and customers include Volkswagen AG, Scania, ABB, BMW, Siemens, Vattenfall and Vestas.
Update 8 September 2019: Volkswagen and Northvolt have now officially established the joint venture announced mentioned above to set up a factory for the production of battery cells in Salzgitter. Both companies are apparently equally involved in the joint venture that has the aim of starting construction of the cell factory next year and with the goal of beginning production around the turn of the year 2023/2024.
Dr. Stefan Sommer, Member of the Volkswagen AG Board of Management responsible for Procurement and member of the Supervisory Board of Northvolt AB, said that, “With the founding of the joint venture and the planned construction of a battery cell factory in Salzgitter, we are making a decisive contribution to establishing the core battery cell technology in Germany as well.”
As expected, the initial annual output of the battery factory is to be 16-gigawatt hours and although Volkswagen has now confirmed that “Part of the approximately 900 million euros invested by Volkswagen is now flowing into the joint venture,” the German carmaking giant has not specified how much exactly.
Chief Executive Officer of the new joint venture and former Chief Strategy Officer of Northvolt, Fredrik Hedlund, said: “Building a gigafactory in Germany together with Volkswagen allows Northvolt to further increase the production capacity of green battery cells with a minimal CO2 footprint. This will have a significant impact on electrification in Europe.”