VW turns to Northvolt for battery cell mass production

The partner for Volkswagen’s decision to start mass production of battery cells for electric cars will not be the South Korean manufacturer SK Innovation as was rumoured. Rather, the German carmaking giant is turning to the Swedish startup Northvolt for all its battery requirements.

Volkswagen’s choice of Northvolt as a supplier was revealed in the German business and trade newspaper, Handelsblatt. Volkswagen will apparently expand its cooperation with Northvolt in the field of battery research, which it concluded in March, in order to set up a joint production facility. This cooperation currently operates under the name European Battery Union (EBU) and is scheduled to start in March at the beginning of 2020.

According to VW Group circles, the German company also plans to acquire a minority stake in Northvolt. A joint venture is also planned at a later date. The German business newspaper also reported that battery cells with a total capacity of almost twelve-gigawatt hours are to be produced annually at the planned plant in Salzgitter. With increasing demand, the capacity could be increased to around 30 GWh per year, but production would first have to start up stably.

Sceptics may complain that Northvolt itself does not yet have its own production in regular operation. However, the startup, led by former Tesla manager Peter Carlsson, plans to build a battery cell plant in Skellefteå, Sweden. By the middle of the year, the company intends to have generated around 1.6 billion euros out of a total of four billion euros for the construction of the production facility. The company, which was founded three years ago, currently employs just 200 people.

As is well known, Volkswagen is planning to electrify its product range on a grand scale. Bernd Osterloh, head of the works council said that through the cooperation with Northvolt, the Volkswagen could initially cover almost ten per cent of its requirements, and in a later expansion stage around 20 per cent. The procurement of cells from Asia will therefore inevitably continue on a grand scale.

Meanwhile, the agreement between the Swedish startup and VW is not exclusive. As Reuters reports, referring to earlier information from Northvolt, the company has already sold about half of its total planned 32-gigawatt capacity by 2023. Among the cooperation partners are Siemens, Vattenfall, ABB and, in the research area, BMW.

Yesterday, Volkswagen’s Swedish commercial vehicle brand Scania announced that it had signed a contract with Northvolt for the supply of battery cells for electric vehicles. Scania CEO Henrik Henriksson said that the brand is considering a financial stake in Northvolt.

handelsblatt.com (in German)