The brand new CEO and president of Volvo Vehicles has predicted that shortage of battery provide will turn out to be a urgent concern for his sector, telling CNBC the agency has made investments that may assist it acquire a foothold available in the market.
“Lately, 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 turn out to be a “absolutely electrical automobile firm” by the 12 months 2030, a transfer which would require it to have a constant and safe provide of batteries for its autos.
“I feel battery provide goes to be one of many issues that comes into scarce provide within the years to return,” Rowan mentioned.
“And that is one of many causes we made that substantial funding with Northvolt: In order that we may be in management not simply of the provision, however we will really begin to develop our personal battery chemistry and manufacturing amenities.”
This may allow Volvo Vehicles to be “in full management of {that electrical} propulsion engine for the long run,” he mentioned.
Gigafactory plans
In February, Volvo Vehicles and battery maker Northvolt mentioned they might construct a battery manufacturing plant in Gothenburg, Sweden, with development set to start in 2023. In line with the businesses, the power is ready to “have a possible annual cell manufacturing capability of as much as 50 gigawatt hours.”
This may equate to supplying sufficient batteries for round 500,000 vehicles yearly, they mentioned. The corporations’ plans to develop a gigafactory had been beforehand introduced, though a selected location was not confirmed on the time.
Because the variety of electrical autos on our roads will increase, battery provide will turn out to be an more and more essential — and aggressive — cog within the automotive sector.
Talking to CNBC’s Annette Weisbach final 12 months, Volkswagen CEO Herbert Diess highlighted simply how essential battery manufacturing can be within the years forward, noting that challenges did exist.
“Batteries could be, as an example, a steady constraint for the expansion of EVs over the subsequent 5 to 10 years,” he mentioned.
“As a result of the lead occasions are large. We’d like a lot vitality and cell manufacturing … [There is a] large provide chain which needs to be arrange inside the subsequent years, and that may, that 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 autos. On April 8, the Tesla CEO tweeted that lithium’s value had “gone to insane ranges!”
“Tesla may really must get into the mining & refining instantly at scale, except prices enhance,” Musk mentioned. “There is no such thing as a scarcity of the factor itself, as lithium is nearly in all places on Earth, however tempo of extraction/refinement is sluggish.”
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 “problem Tesla and all comers to turn out to be the highest EV maker on the planet.”
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 can’t be getting distracted from what we have to get achieved. And that’s, fairly merely, that we have to proceed our march in 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 succeed in 74.3 billion Swedish krona (round $7.56 billion). Earnings earlier than curiosity and taxes got here in at 6 billion krona, in comparison with 8.4 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 12 months.
As with many companies, provide chain points proceed to impact operations. “Semiconductor constraints continued to steadily enhance,” the corporate mentioned.
“Nonetheless, resulting from a short lived scarcity of a selected semiconductor, manufacturing was down on the finish of the primary quarter. This scarcity is anticipated to stay within the second quarter.”
Trying forward, the enterprise mentioned it was anticipating “provide chains to enhance within the second half of the 12 months.”
—Chloe Taylor contributed to this text.