Volvo’s takeover of Northvolt, the battery manufacturer based in Stockholm, is a strategic marriage of necessity, not a love affair.
With Pippi Longstocking long retired and Saab now resting in the graveyard of defunct brands, Sweden seems to be running low on unique selling points. Meanwhile, Volvo, traditionally seen as the more boring sibling, has managed to maintain a significant market share in Northern Europe. However, following its acquisition by Zhejiang Geely Holding in 2010, the brand is starting to shed its dull image and become increasingly sexy. As Volvo embraces this new phase with Northvolt, it appears the brand is ready to electrify its image even further.
Many market participants are currently reversing course from an ideology-driven climate hysteria. The exit from the exit of internal combustion engines is considered a done deal among most European and American automakers.
To understand Volvo’s decision, it’s essential to examine the background and key figures of the holding company, particularly Geely and its CEO, Li Shufu. While electromobility will continue to play a role in the automotive landscape, I believe that the European market is being left behind by Chinese manufacturers. Within the Geely group, Volvo is poised to serve as a purely electric flagship, fulfilling this niche role.
This also explains the acquisition by Volvo/Geely, as they are essentially feeding an elephant with something it will undoubtedly need in the next ten years.
This strategic move is pivotal for Volvo as it accelerates its transition to electric vehicles (EVs) and secures a robust supply chain for battery technology. Valued at approximately $2 billion USD, the deal underscores the importance of integrating innovative battery solutions into Volvo’s operations, especially as the automaker aims to become a fully electric car brand by 2030.
Northvolt, founded in 2016 by Peter Carlsson and Paolo Cerruti, has quickly emerged as a leader in sustainable battery manufacturing. Its flagship facility, Northvolt Ett, located in Skellefteå, Sweden, is designed to produce up to 60 GWh of battery capacity annually. The factory emphasizes sustainability by utilizing renewable energy sources and implementing recycling initiatives to promote a circular economy. On the other hand, the company has not been around long enough to really assess its longevity and stability (est. 2015).
This acquisition is crucial for Volvo, which plans to launch several new electric models in the coming years, all requiring significant battery resources. By securing a direct line to battery production, Volvo can ensure a consistent supply of high-quality batteries to meet its ambitious electrification goals. However, there is a risk that other manufacturers of electric vehicles, particularly from China, could pose a resource problem for Volvo in the future, even within the European market.
Nevertheless, the collaboration with Northvolt will enhance Volvo’s investment in research and development for next-generation battery technologies, focusing on new chemistries that offer longer ranges and shorter charging times—key factors for consumer adoption of EVs.
In this context, it’s important to note that I see this as “challenging”, as Volvo must compete not only with European automakers but also with the entire Chinese automotive market, which is increasingly making its mark in Europe—regardless of whether import tariffs are raised to an exorbitant level or not.
Volvo’s CEO, Jim Rowan, has highlighted the necessity of strategic partnerships in achieving electrification goals, stating, “The future of mobility is electric, and this partnership with Northvolt will accelerate our efforts to deliver sustainable, innovative vehicles that meet the needs of our customers.”. Today, it can be said that this is no longer a majority opinion, as the new owners of Volvo see their brand in a niche sector. Meanwhile, Peter Carlsson, CEO of Northvolt, expressed excitement about the collaboration, noting that joining forces with Volvo will allow them to leverage their strengths and scale production capabilities, driving the transition to sustainable transport.
As the global EV market experiences unprecedented growth—expected to reach 10 million units sold by 2025—Volvo’s acquisition of Northvolt positions the company favorably in a competitive landscape. By aligning with a leading battery manufacturer, Volvo not only secures vital resources for its upcoming electric models but also reinforces its commitment to sustainability. This partnership could prove to be a critical factor in Volvo’s success in the ongoing electrification race.
In this strategic marriage, it seems the bride—Northvolt—emerges as the clear winner, while the husband, Volvo, merely has to nod and smile. Viewed from this angle, it’s safe to say that Geely and Mr. Li Shufu have certainly made the right choice.
Many thanks to the representatives of the Volvo Group and Geely for the pleasant phone calls, their openness and transparency regarding this deal, and for providing the graphic materials.
