Volvo and Swedish battery company Northvolt are to build a European gigafactory under a new partnership to develop and produce electric vehicle batteries.  

The planned joint venture will establish a new gigafactory in Europe with a potential capacity of up to 50 gigawatt hours (GWh) per year

Scheduled to start production in 2026, the gigafactory in Europe will have a potential capacity of up to 50 gigawatt hours (GWh) per year and will supply future electric Polestar and Volvo cars, starting first with the all-electric replacement to the current XC60 – Volvo has said it will become a fully electric car company by 2030 and aims for half its sales to be fully electric by the middle of this decade.

The 50/50 joint venture will also see Volvo source 15GWh of battery cells per year from the existing Northvolt Ett battery plant in Skellefteå, Sweden, starting in 2024. This will run alongside Volvo’s existing battery supply agreements, supporting its electrification plans.

The firms will also set up a research and development centre in Sweden that will begin operations in 2022 and develop next-generation battery cells and vehicle integration technologies.

Volvo said a core focus of the deal had been on producing batteries near its manufacturing facilities in Europe, enabling it to reduce the environmental footprint attributable to battery sourcing and production for its future cars. It’s also planning to run the gigafactory on 100% clean energy.

“By working with Northvolt we will secure a supply of high-quality, more sustainable battery cells for our pure electric cars,” said chief executive Håkan Samuelsson. “Working closely with Northvolt will also allow us to strengthen our in-house development capabilities.”

For Polestar, the deal will help boost its European growth ambitions and underlines its commitment to the Polestar 0 project, which aims to create a truly climate-neutral vehicle by 2030.

“Developing the next generation of battery cell technology in-house, together with Northvolt, will allow us to design batteries specifically for Volvo and Polestar drivers,” added Henrik Green, chief technology officer at Volvo Cars. “With cells developed in-house for our electric cars, we can focus on giving Volvo and Polestar customers what they want, such as range and short charging times.”

The partnership and joint venture are subject to final negotiation and agreements between the parties, including board approval.