Autos CEO warns of battery provide shortage as EV competitors heats up

In 2021, Volvo Automobiles mentioned it deliberate to change into a “totally electrical automobile firm” by the yr 2030, a transfer which would require it to have a constant and safe provide of batteries for its automobiles.

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The brand new CEO and president of Volvo Cars has predicted that shortage of battery provide will change into a urgent subject for his sector, telling CNBC the agency has made investments that might assist it acquire a foothold available in the market.

“Not too long ago, we made a fairly substantial funding with Northvolt, in order that we’re in command of our personal battery provide as we go ahead,” Jim Rowan, who joined the enterprise final month, instructed CNBC’s “Squawk Field Europe” Thursday.

In March 2021, Volvo Automobiles mentioned it deliberate to change into a “fully electric car company” by the year 2030, a transfer which would require it to have a constant and safe provide of batteries for its automobiles.

“I believe battery provide goes to be one of many issues that comes into scarce provide within the years to return,” Rowan mentioned.

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“And that is one of many causes we made that substantial funding with Northvolt: In order that we will be in management not simply of the provision, however we are able to really begin to develop our personal battery chemistry and manufacturing services.”

This might allow Volvo Automobiles to be “in full management of {that electrical} propulsion engine for the long run,” he mentioned.

Gigafactory plans

In February, Volvo Automobiles and battery maker Northvolt mentioned they might build a battery manufacturing plant in Gothenburg, Sweden, with development set to start in 2023. Based on the businesses, the power is about to “have a possible annual cell manufacturing capability of as much as 50 gigawatt hours.”

This might equate to supplying sufficient batteries for round 500,000 vehicles yearly, they mentioned. The companies’ plans to develop a gigafactory had been beforehand introduced, though a selected location was not confirmed on the time.

Because the variety of electrical automobiles on our roads will increase, battery provide will change into an more and more essential — and aggressive — cog within the automotive sector.

Speaking to CNBC’s Annette Weisbach final yr, Volkswagen CEO Herbert Diess highlighted simply how essential battery manufacturing can be within the years forward, noting that challenges did exist.

“Batteries is perhaps, as an instance, a steady constraint for the expansion of EVs over the following 5 to 10 years,” he mentioned.

“As a result of the lead instances are large. We’d like a lot power and cell manufacturing … [There is a] large provide chain which needs to be arrange inside the subsequent years, and that may, which may, result in some constraints.”

Extra not too long ago, this month noticed Elon Musk spotlight the significance of lithium, a key a part of the batteries utilized in electrical automobiles. On April 8, the Tesla CEO tweeted that lithium’s price had “gone to insane levels!”

“Tesla may really should get into the mining & refining instantly at scale, except prices enhance,” Musk mentioned. “There isn’t a scarcity of the ingredient itself, as lithium is sort of all over the place on Earth, however tempo of extraction/refinement is gradual.”

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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 “challenge Tesla and all comers to become the top EV maker in the world.”

Throughout his interview with CNBC, Volvo Automobiles’ Rowan was requested if there was a hope Musk’s takeover of Twitter would show to be a distraction for the Tesla CEO.

“I do not know,” he replied. “I do know one factor … I cannot be getting distracted from what we have to get executed. 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 bought 148,295 vehicles within the first quarter, which it mentioned was a 20% drop in comparison with the identical interval final yr.

As with many companies, provide chain points proceed to impact operations. “Semiconductor constraints continued to steadily enhance,” the corporate mentioned.

“Nonetheless, on account of a brief scarcity of a selected semiconductor, manufacturing was down on the finish of the primary quarter. This scarcity is predicted to stay within the second quarter.”

Trying forward, the enterprise mentioned it was anticipating “provide chains to enhance within the second half of the yr.”

—Chloe Taylor contributed to this text.

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