Summary
- Volvo Cars fully take over battery joint venture from Northvolt after contract breach
- Decline to disclose price of sale
- Northvolt attempting to divest most of joint venture businesses to avoid full collapse
- Northvolt explores potential North American supply opportunities with Volvo Cars
STOCKHOLM, (Reuters) – Swedish electric-vehicle battery maker Northvolt agreed with Volvo Cars on Wednesday to sell its stake in their joint battery venture Novo Energy for an undisclosed sum and explore potential collaborations in North America.
Northvolt, which is under U.S. bankruptcy protection, ceased funding for most of its joint ventures, including Novo, throughout 2024 to sustain its primary business of battery cell production.
Due to this, the automaker found Northvolt in breach of contract in October and said it would acquire the stake in Novo.
Both companies declined to comment on the financial details of the agreement.
A U.S. bankruptcy court will need to approve the stake sale.
The sale is the latest by Northvolt to divest projects and businesses such as in Poland and Norway, to cut costs and focus on its battery plant in northern Sweden. It also has plans for gigafactories in Germany and Canada, where delays are expected.
The company is also searching for fresh investors and funding before its cash reserve runs out in February.
Volvo Cars and Northvolt, once hailed as Europe’s best prospect for a domestic EV battery champion, formed Novo in 2021 to build a dedicated battery factory in Gothenburg on Sweden’s west coast.
Volvo said in October it would need a new partner to keep plans to start production at the factory in 2026 on track. It has not commented on this since.
On Jan. 20, Novo launched cost cutting measures, including cutting, 30% of its staff.
A Novo spokesperson said Northvolt’s expertise has been instrumental in its development.
“Going forward we will work with Volvo Cars in evaluating a future technological partner for our gigafactory,” the spokesperson said.
SUPPLY OPPORTUNITIES
Northvolt has struggled with persistent quality issues and troubles increasing production of its battery cells, which led BMW to cancel a 2-billion euro ($2.08 billion) contract last year and other stakeholders to worry if Northvolt would be able to meet its promises.
While Volvo’s takeover of Novo means that Northvolt would lose out on its planned orders to the carmaker, the Swedish companies said on Wednesday they agreed on a plan to explore potential supply opportunities in North America.
“The framework agreement with Volvo Cars shows that market interest in Northvolt remains strong, it now opens up a path for supply opportunities in North America at Northvolt Six in Montreal,” a Northvolt spokesperson said.
($1 = 0.9615 euros)
($1 = 11.3197 Norwegian crowns)
Reporting by Stine Jacobsen and Marie Mannes, Editing by Anna Ringstrom, Louise Heavens and Emelia Sithole-Matarise
