Peerapon Boonyakiat / SOPA Images | LightRocket | Getty Images The new CEO and President of Volvo Cars predicted that the lack of battery supply would become a pressing issue for his industry, telling CNBC that the company had made investments that would help it gain ground in the market. “Recently, we made a significant investment with Northvolt to control our own battery life as we move forward,” Jim Rowan, who joined the company last month, told CNBC’s “Squawk Box Europe” on Thursday. . In March 2021, Volvo Cars said it planned to become a “fully electric car company” by 2030, a move that would require it to have a consistent and secure supply of batteries for its vehicles. “I believe that providing batteries will be one of the few things on offer in the coming years,” Rowan said.
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“And that’s one of the reasons we made this major investment with Northvolt: so that we can not only control the supply, but we can really start developing our own battery chemistry and production facilities.” That would allow Volvo Cars to “have full control of this electric propulsion engine for the future,” he said.
Gigafactory plans
In February, Volvo Cars and battery maker Northvolt said they would build a battery plant in Gothenburg, Sweden, with construction starting in 2023. According to the companies, the plant will have a “potential annual production capacity of up to and at 50 gigawatt hours “. That would equate to providing enough batteries for about 500,000 cars each year, they said. The companies’ plans to develop a gigafactory had been announced earlier, although a specific location had not been confirmed at the time. As the number of electric vehicles on our roads increases, the supply of batteries will become an increasingly important – and competitive – cog in the automotive sector. Speaking to CNBC’s Annette Weisbach last year, Volkswagen CEO Herbert Diess emphasized the importance of battery life in the coming years, noting that there are challenges. “Batteries can be, say, a continuing constraint on the development of electric vehicles for the next five to ten years,” he said. “Because delivery times are huge. We need so much energy and cell production … [There is a] a huge supply chain that needs to be created in the coming years and this will possibly lead to some restrictions. “ More recently, this month Elon Musk stressed the importance of lithium, a key part of batteries used in electric vehicles. On April 8, Tesla CEO wrote on Twitter that the price of lithium had “dropped to crazy levels!” “Tesla may need to start mining and refining directly on a scale unless costs improve,” Musk said. “There is no shortage of the element itself, as lithium is present almost everywhere on Earth, but the rate of extraction / optimization is slow.”
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Volvo’s electric propulsion plans put it in direct competition with long-standing automakers such as Volkswagen, GM and Ford, as well as Tesla. Just this week, Ford CEO Jim Farley said his business plans to “challenge Tesla and everyone else to become the world’s leading EV maker.” During his interview with CNBC, Volvo Cars’s Rowan was asked if there was any hope that Musk’s acquisition of Twitter would prove to be a distraction for Tesla CEO. “I have no idea,” he replied. “I know one thing … I will not distract myself from what we have to do. And that is, quite simply, that we must continue on our path to electricity.” Rowan was speaking the same day his business announced its results for the first quarter of 2022. Revenue rose 8% to SEK 74.3 billion (approximately $ 7.56 billion). Profits before taxes and interest amounted to 6 billion kroner, compared to 8.4 billion in the first quarter of 2021. The company sold 148,295 cars in the first quarter, which it said was a 20% drop from the same period last year. As with many businesses, supply chain issues continue to affect operations. “Semiconductor restrictions have continued to improve gradually,” the company said. “However, due to a temporary shortage of a specific semiconductor, production fell at the end of the first quarter. This shortage is expected to remain in the second quarter.” Looking to the future, the company said it expects “supply chain improvements in the second half of the year”. —Chloe Taylor contributed to this article.
