Volkswagen Announces $1Billion Investment in European Battery Production with Northvolt AB

Volkswagen has just announced that it will be investing just over $1 billion on electric batteries with Swedish electronics company Northvolt AB.

That’s going to be a mix between a new joint venture with the battery cell producer and VW acquiring 20 percent of the company’s shares and gaining a seat on the board of directors.

The big part of the news is the joint venture. It’s a 50/50 move to build a new factory in the Lower Saxony region of Germany that will have the capacity to produce 16 GWh of cells. Production of the building is set to start next year with battery cells for VW starting at the end of 2023.

“Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy,” said Dr Stefan Sommer, VW board member for procurement. “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.”

Volkswagen’s massive electrification strategy is set to see 20 full EV models by 2025 including production versions of the ID concepts it’s been showing for the last few years. The automaker is expecting to see that require 150 GWh per year of battery cell production for Europe alone, and approximately the same demand for Asia. Which means it needs batteries, and the company has expressed it wants much of that production done locally. This move will help with both goals.

Northvolt has said it’s planning on using the share purchase money to help fund expansion of its nearly-complete 16 GWh facility in Sweden to 32 GWH per year.