Volkswagen Invests in Northvolt to Create Joint Battery Factory

by Denis Gurskiy

Volkswagen has announced that it has made a €900 million ($1.01 billion) investment in Northvolt AB to help create a joint battery factory.

Volkswagen has a lot of electric cars planned, and by 2025 they are projected to need a total annual capacity of batteries of 150 GWh in Europe alone. The Asian market is projected to have around the same requirements during that time period.

With such high requirements, Volkswagen cannot afford to have battery contract fall through, like we reported the rumor of Samsung not being able to provide enough batteries. Volkswagen has stated their intentions of producing their own batteries (hopefully of the solid-state variety). VW CEO Herbert Diess himself stated that:

“We must not make ourselves dependent on a few Asian manufacturers in the long term”

It now seems that Volkswagen has set the plan in motion and will gain a battery factory for itself. The €900 million investment will give Volkswagen 20% of Northvolt.

Additionally, Volkswagen is planning to establish a 50/50 joint venture with Northvolt to set up a battery factory in Salzgitter, Germany. The factory would have an annual capacity of 16 GWh which can be eventually increased to 24 GWh. Construction at earliest would start in 2020 and will not finish until 2023-2024.

Dr. Stefan Sommer, Member of the Volkswagen AG Board of Management, had the following comment:

“Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy. With Northvolt, we have now also found a European partner whose know-how and sustainable, CO2-optimized battery cell production processes will enable us to advance cell production here in Germany. The prerequisite for this is, of course, the creation of the necessary economic framework.”

Northvolt AB is a Swedish battery startup founded by two former Tesla executives. Separate from this arrangement, Northvolt has raised money from Volkswagen Group, Goldman Sachs Merchant Banking Division, BMW Group, AMF, Folksam Group and IMAS Foundation. The equity raise will enable the Northvolt to establish its own and first gigafactory in Skellefteå, Sweden. Construction of that factory is estimated to begin in 2021 and provide an annual capacity of 32 GWh.

What do you guys think of Volkswagen’s strategy moving forward? Let us know down in the comments below?

Source: Volkswagen

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