Hello, and welcome to this live broadcast and conversation on Volvo Cars and Northvolt's acceleration towards electrification. My name is Jenny, and with me here today I have Javier Varela, Head of Engineering and Operations at Volvo Cars, and Peter Carlsson, CEO of Northvolt. We will have a short presentation on today's topic, and on the back of that there will be the opportunity to ask any question to Peter and Javier. If you have a question, don't hesitate to use the chat function on the website that you're on now, and you can just post it there, and we will have the opportunity to ask those questions after the presentation. Javier, over to you.
Thank you, Jenny. I'm super excited to be today with all of you. Let me start by reminding what we have already announced last year. We have created a joint venture between Northvolt and Volvo Cars with the intention to design and produce state-of-the-art battery cells. This joint venture means a lot for Volvo Cars in our road to 2030 production of all electric cars. This is a major milestone. We have both of us the joint commitment to decarbonize the industry and contribute to drastically reduce the emissions of CO2. When it comes to the R&D, we have already announced that the location of this facility will be in Gothenburg.
We will be up to 300 developers in this location, and we will have the access to critical competences by this proximity to our automotive cluster in Gothenburg. Now is the important moment of reveal what is the location for our production plant. Over to you, Peter.
Thank you, Javier. Yes, as you probably heard, we are super happy today to announce that, after a thorough site selection process, we have decided to choose Gothenburg and Torslanda as the right location for the joint venture factory. This is driven out of a thorough evaluation of the ability to meet the logistics requirements where we have superior logistics in and outbound from the Gothenburg harbor. The infrastructure opportunities in terms of both establishing grid capacity in this area, as well as other important feeding systems such as water, etc., that is necessary for the factory.
The close proximity to the Volvo Cars plants will also enable a very efficient logistics and a minimization of transports between the battery manufacturing and the integration into the vehicle. Obviously, this factory is planned to be beyond the capacity of Gothenburg, but the logistics here is very important. Not least, Gothenburg as a competence cluster and the ability to continue recruiting both local but also international experts into this joint venture, we believe is a very good location.
We've also met and got an enormous support by the municipality, by the region, and also by, you know, the Swedish government in this establishment since a factory of this size is not just a factory. It's basically an ecosystem around electrification that needs to be built. We are very happy with this today. Now starts the next phase in this journey, which is starting the permitting processes for this factory, establishing the joint venture management. I'm very happy that we have managed to get Adrian Clarke, a senior executive of Tesla, to come and lead this joint venture and to build a really strong manufacturing team around him.
Obviously also to secure the supply chains and all the different partners that will be involved in building this infrastructure. We, you know, we estimate a total investment towards SEK 30 billion in this total factory setup. With that, I guess we are open for some questions.
Yes. Thank you so much. A reminder that you can post your questions in the chat, of course. The first question coming in here is actually to you, Javier. How important is this joint venture for Volvo Cars and the shift to electrification?
To start with, I would say that both of us, Northvolt and Volvo Cars, we share a passion and drive to improve sustainability. In our road to 2030 being full electric producer or car manufacturer, we thought that we needed to go a bit deeper in the value chain and understanding better the cell design and production. That's why we thought that merging the capabilities of Northvolt when it comes to cell chemistry, cell design, together with our capabilities in vehicle integration, software around the car, drivability, those two combination could make this tailor-made cell that will excel in performance in our cars, really tailor-made, improving quality, improving performance, and really adding additional value for our customers.
Great. Thank you. To which Volvo plants will you ship the batteries from your new plant?
We are mainly shipping to Skövde plant, and then we will ship as well to our plant in Belgium. We have a very good connection from Gothenburg. We have already established a sea shuttle that is working every day, moving parts from or the components from Sweden to Belgium and the opposite. Those two will be the main receivers of our supply from this plant.
Thank you. A question to you, Peter. Have you secured fossil-free energy supply to the plant, considering it will be in southern Sweden?
To answer that question, I think you need to take the energy question in two pieces. One is have we secured basically the capacity in the grid to establish this plant. With certain investments that is committed by the energy company and by the state grid, we will have the needed capacity in the grid by the start of production, which by the way is planned to be in 2025 according to the current plan if all project is going well.
You have the second part, which is you know if we have the capacity how do we safeguard that we can meet our sustainability requirements? There over the next coming years we will work to secure that the ones who has capacity of renewable energy that we can match up their capacities with our needs. This is a work that it will be ongoing here over the coming years up to the start of production. We strongly believe that you know that we can maintain our full sustainability proposition also with this setup in Gothenburg.
Thank you. An additional question coming through here that's: What is the status of your plant in Skellefteå?
Well, I was just coming there yesterday and just in relationship to this joint venture, you know, yesterday was -20 degrees Celsius up in Skellefteå. You clearly see how that cold weather affects the electric vehicles. It's you know, finding solutions and finding better propositions to these types of problems that we see that the joint venture has a great opportunity to do by learning by field data and by you know, integrated into better both battery products as well as integration solutions. To answer the question, up in Skellefteå, it is intense up in Skellefteå.
We did the first battery just I think two days before New Year's, and then we did actually the first formation, so the final configuration of that battery in the early of January. What we're now working on is you know basically tuning the process. This will take time in order to tune in and gradually start ramping up the different capacities. It's a super committed, a little bit tired, but super committed team up in Skellefteå who is working there.
Good to hear. Maybe this is a question to the both of you. What is your view on the overall battery cell capacity in Europe?
Do you want to start, Peter?
I mean, if. Yeah. Maybe I can start, and you can chime in.
Yeah
Javier. I think there is, you know, what we're in is in a state of what I would call industrial land grabbing. You know, obviously everybody sees a tremendous demand growth, probably, you know, going from you know maybe 120GWh in 2022 up towards north of what I think 1,000GWh 2030 in Europe. You know, the car makers and others needs to look strategic at this, which means that, you know, capacity planning is now in the 2025, 2026.
There is a whole bunch of companies that is claiming aspirations of building a lot of capacities. If you look at what is actually happening on the ground versus those commitments, you will actually see that there is not near as much activity physically happening as being claimed in the media. Here is where I think some of the challenges and realities comes in, and that is that the industry is facing a significant competence shortage. There is also challenges around bottlenecks in supply chains, bottlenecks in equipment, et cetera, that just comes with this industry growing as fast.
My view is that this is gonna be a continued constrained market, and I think the more strategic you can work on partnership and alliances and build secure supply chains, the better you will be in this very fast-growing market. Javier, what do you think?
Absolutely, fully agree with you. There's a rush in increasing capacity. Many OEMs are going electric, not as ambitious maybe as we are, but there's a percentage of their volumes that will be electric, so an increasing capacity, not only in Europe, as well in U.S. and in Asia. From the Volvo Cars perspective, we understand that possible constraint, and we have secured our capacity. Our approach to secure our capacity is a mix of internal production, as the one we are now announcing, in a combination with a external supply from our partners, supplier partners, the ones that we are partnering today, and we will continue that partnership.
We will get the supply and secure capacity through the combination of both internal production through this joint venture and supply from our beloved partners, suppliers.
Wow, that's interesting. Also, on the back of that, we have a question on the next step. Will there be an expansion of the joint venture to maybe Asia or America or some other parts?
I think we need to take it step by step. Today, it's clear that we are focusing on our European needs, and to be discussed in the future how we will secure capacity in other areas.
Excellent. On the back of that then.
Can-
Yeah, sorry, Peter.
Peter.
Do you want to comment?
No, I was just going to say, obviously, from day one, we've had a big European focus, and our infrastructure is here. But it is also pretty clear that the electrification platforms are really becoming global, and the rollout of product portfolios are becoming global. However, batteries are heavy to ship, and they're also, to some extent, a bit complicated in terms of logistics, since there is a certain hazardous goods requirements when you ship batteries, which means that it will be a regionalization of the supply chain, and that's a reality also for us, that we need to continue exploring.
On the back of sort of the whole picture in this case in Europe, why did the choice end up with Gothenburg, Javier? What were the reasons for that?
Yeah. We have looked to an important amount of possibilities and locations in Sweden and outside Sweden. Finally, we have chosen Gothenburg because of infrastructure, criteria, logistics. Peter already explained in the introduction, the proximity to our consumption in the car plant, the facility to get the materials in, access to energy as well, and to fossil-free energy, and access to competencies. I think those are three main criteria that have finally deciding us to take Gothenburg as the location.
Looking at the competencies, we have spoken about 3,000 new jobs being an opportunity here. What kind of competencies are we looking for? Peter?
Well, you know, first, we need to build a management team and a construction team to drive this project forward. This would be the number one. In parallel, we're also building the R&D team. To be honest, a fairly large amount of the critical resources will probably come from, you know, from different international competence clusters. Here we think that Gothenburg with its international touch, with its international school capabilities, et cetera, is a really attractive point.
As we then move into startup of production, the focus will then come on process engineers, quality engineers, material logistics people, and obviously operators. Here, I think, one key enabler is to drive pretty big, transition training and educational, programs, because this will obviously happening in, conjunction with reduction of combustion engines. I think if we can find a way of transitioning people who have previously have long experience in, you know, strong lean manufacturing of, those in that ecosystem and transition it into, the battery ecosystem, it's a different type of manufacturing. With proper, competence development, we think this is a very important, transformation, and we will work together with different authorities to plan this long ahead.
Thank you. From Ny Teknik, we have a question on what kind of research will be made in Torslanda. Tailor-made cells for Polestar, but what does that mean? A new battery chemistry?
Peter.
Yeah. No, basically what we target here is to take and drive an organization and a development focus with people from Volvo, from Northvolt to develop the next generation platform, the one beyond the platform that will be introduced roughly 2024, right, Javier?
Yeah.
Obviously, further improvements in energy density is in order to get lesser weight, more range. Obviously, also charge discharge to have shorter and shorter charging time is a key criteria. But also to look at features such as, you know, cold weather performance and other things that where the field data tells us that here is opportunity to enhance enhancements. All these are kind of parameters that is being both developed in the chemistry system, but they're also driven by how you run the integration and how you control the system.
This is where we think that the combined efforts can really drive faster time to market and better customer experience on the end product. If we then will go towards you know a higher silicon-doped anode and you know higher nickel levels on cathode, I think it's a little bit too early, but obviously it will drive a new technology development.
Yeah, absolutely. We will work, as Peter saying, in the integration in the car. We will come with a different approach in the way how we integrated the cells in the car. Of course, we will allow ourselves to touch upon the or to work on the chemistry, on the physics, on the form factor to make the start the cell the best in class at that moment for our full electric cars, next generation. That's the approach. We will be very open in working in the different components of the cell.
Excellent. We've touched base on a lot of different things, on the competencies, on where the battery plant is situated. We have discussed a bit about the future, the next generation, what's going to happen with development. Some questions are still coming in regarding the energy from GP amongst others. Just to reiterate a bit, I know you mentioned this in the beginning as well, but how do you secure the amount of energy in this region? How can you make sure its green energy, and how can we level up the amount of energy needed for the factory?
I think.
Yeah.
No, Peter.
Javier, go.
No, I was just saying that has been, of course, one of our big priorities when we have started the project and we have discussed with the different regions and municipalities and we have a plan how to secure that electricity and securing that is absolutely fossil-free. As Peter was saying, there are still discussions ongoing and further discussions to increase the rate of renewable energy within that supply, thinking about wind, offshore wind farms.
I think to allude to that, obviously there is a number of wind farm projects that is under development offshore the west coast of Sweden. There is, you know, also obviously other sources where we can secure renewable capacities into the grid, maybe not next to our factory, but into the grid that takes it to our factory in Gothenburg, as a renewable source. You know, the so-called PPA type of energy setups. I think the important thing is we will very strategically first secure the capacity of the grid, secondly secure that the content of our energy sources is in line with our overall strategy.
Thank you so much. A couple of questions coming through here as well. First one to you, Peter. What impact will the factory in Gothenburg have for Northvolt Ett in Skellefteå?
I think you know what the factory will mean is you know additional scalability. The factory will be very much developed out of Skellefteå blueprint. The blocks and the intended setup will be transferred into the new joint venture factory. Obviously there will be improvements there will be certain adjustments to the site location et cetera. This will you know this will ensure that we are not basically starting from scratch but that we can drive a fairly efficient and fast project in the construction and design and project management.
What it also means is around the supply chains we are with this factory establishing additional capacities starting roughly around 30, but with the aim of going towards 50GWh . This also will drive localization and regionalization of critical components, raw materials, critical suppliers, which will also benefit the buildup of the ecosystem in Europe. There is still a very high dependency on China at this point of time, and it is important to build this ecosystem, not least as we see that you know over the last year the logistics systems globally have been you know very challenging.
There's a whole bunch of benefits between Skellefteå and Gothenburg in this. We don't believe also that Gothenburg will cannibalize the between the resources, but it will actually open up an additional labor market in our overall scale ambition.
Thank you so much. Good. I think that's about all we have time for now. Thank you so much, Peter and Javier for this session, and thank you for watching.