In 2021, Volvo Vehicles mentioned it deliberate to grow to be a “totally electrical automotive firm” by the yr 2030, a transfer which would require it to have a constant and safe provide of batteries for its automobiles.
Peerapon Boonyakiat /SOPA Photos | LightRocket | Getty Photos
The brand new CEO and president of Volvo Cars has predicted that shortage of battery provide will grow to be a urgent subject for his sector, telling CNBC the agency has made investments that may assist it achieve a foothold available in the market.
“Not too long ago, we made a fairly substantial funding with Northvolt, in order that we’re answerable for our personal battery provide as we go ahead,” Jim Rowan, who joined the enterprise final month, advised CNBC’s “Squawk Field Europe” Thursday.
In March 2021, Volvo Vehicles mentioned it deliberate to grow to be a “fully electric car company” by the year 2030, a transfer which would require it to have a constant and safe provide of batteries for its automobiles.
“I believe battery provide goes to be one of many issues that comes into scarce provide within the years to come back,” Rowan mentioned.
“And that is one of many causes we made that substantial funding with Northvolt: In order that we will be in management not simply of the provision, however we are able to truly begin to develop our personal battery chemistry and manufacturing services.”
This is able to allow Volvo Vehicles to be “in full management of {that electrical} propulsion engine for the longer term,” he mentioned.
Gigafactory plans
In February, Volvo Vehicles and battery maker Northvolt mentioned they’d build a battery manufacturing plant in Gothenburg, Sweden, with building set to start in 2023. In line with the businesses, the ability is ready to “have a possible annual cell manufacturing capability of as much as 50 gigawatt hours.”
This is able to equate to supplying sufficient batteries for round 500,000 vehicles yearly, they mentioned. The companies’ plans to develop a gigafactory had been beforehand introduced, though a particular location was not confirmed on the time.
Because the variety of electrical automobiles on our roads will increase, battery provide will grow to be an more and more vital — and aggressive — cog within the automotive sector.
Speaking to CNBC’s Annette Weisbach final yr, Volkswagen CEO Herbert Diess highlighted simply how vital battery manufacturing could be within the years forward, noting that challenges did exist.
“Batteries may be, as an instance, a steady constraint for the expansion of EVs over the following 5 to 10 years,” he mentioned.
“As a result of the lead instances are large. We’d like a lot power and cell manufacturing … [There is a] large provide chain which needs to be arrange inside the subsequent years, and that can, which may, result in some constraints.”
Extra just lately, this month noticed Elon Musk spotlight the significance of lithium, a key a part of the batteries utilized in electrical automobiles. On April 8, the Tesla CEO tweeted that lithium’s price had “gone to insane levels!”
“Tesla may truly need to get into the mining & refining straight at scale, until prices enhance,” Musk mentioned. “There isn’t any scarcity of the component itself, as lithium is nearly in all places on Earth, however tempo of extraction/refinement is gradual.”
Volvo’s electrification plans put it in direct competitors with long-established automakers like Volkswagen, GM and Ford, in addition to Tesla. Simply this week, Ford CEO Jim Farley mentioned his enterprise deliberate to “challenge Tesla and all comers to become the top EV maker in the world.”
Throughout his interview with CNBC, Volvo Vehicles’ Rowan was requested if there was a hope Musk’s takeover of Twitter would show to be a distraction for the Tesla CEO.
“I don’t know,” he replied. “I do know one factor … I cannot be getting distracted from what we have to get carried out. And that’s, fairly merely, that we have to proceed our march in the direction of electrification.”
Rowan was talking on the identical day his enterprise introduced outcomes for the primary quarter of 2022.
Income grew by 8% to achieve 74.three billion Swedish krona (round $7.56 billion). Earnings earlier than curiosity and taxes got here in at 6 billion krona, in comparison with 8.four billion within the first quarter of 2021.
The corporate offered 148,295 vehicles within the first quarter, which it mentioned was a 20% drop in comparison with the identical interval final yr.
As with many companies, provide chain points proceed to affect operations. “Semiconductor constraints continued to progressively enhance,” the corporate mentioned.
“Nevertheless, as a consequence of a short lived scarcity of a particular semiconductor, manufacturing was down on the finish of the primary quarter. This scarcity is anticipated to stay within the second quarter.”
Wanting forward, the enterprise mentioned it was anticipating “provide chains to enhance within the second half of the yr.”
—Chloe Taylor contributed to this text.
