Autos CEO warns of battery scarcity as competition for electric vehicles intensifies

In 2021, Volvo Cars said it planned to become an “all-electric car company” by 2030, a move that would require it to provide stable, safe batteries for its cars.

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New CEO and President Volvo cars Anticipating that battery scarcity would become an urgent problem for his sector, he told CNBC that the company had made investments that would help it gain a foothold in the market.

“Recently, we made a reasonably large investment with Northvolt, so we can control our battery supply as we go forward,” Jim Rowan, who joined the business last month, told CNBC’s “Squawk Box Europe” on Thursday.

In March 2021, Volvo Cars said it plans to become “All Electric Vehicle Company” by 2030, It is a move that requires it to have a stable and safe supply of batteries for its cars.

“I think the battery supply is going to be one of the things that will become a scarce supply in the coming years,” Rowan said.

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“And that’s one of the reasons we’re making such a big investment with Northvolt: So we can control not only supply, but we can actually start developing our own battery chemistry and production facilities.”

He said this would enable Volvo Cars to be “in full control of the electric drivetrain of the future”.

Gigafactory plans

In February, Volvo Cars and battery maker Northvolt said they would Building a battery manufacturing plant in Gothenburg, Sweden, With construction starting in 2023. According to the companies, the facility is slated to have “a potential annual cell production capacity of up to 50 GWh.”

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This, they said, would be equivalent to providing enough batteries for about 500,000 cars each year. The companies’ plans to develop a giant plant were previously announced, although a specific location was not confirmed at the time.

As the number of electric vehicles on our roads increases, battery supply will become an increasingly important – and competitive – factor in the automotive sector.

Talking to CNBC’s Annette Weisbach last year, Volkswagen CEO Herbert Diess highlighted how important battery production is in the coming years, noting that there are challenges.

“Batteries, for example, may be an ongoing constraint on the growth of electric vehicles over the next five to 10 years,” he said.

“Because the lead times are huge. We need a lot of energy and cell production… [There is a] A huge supply chain that needs to be created within the coming years, and this may lead to some limitations.”

More recently, this month Elon Musk saw the importance of lithium, an essential part of batteries used in electric vehicles. On April 8, a Tesla Executive Director He tweeted that the price of lithium “has gone to insane levels!”

“Tesla may in fact have to get into direct mining and refining on a large scale, unless costs improve,” Musk said. “There is no shortage of the element itself, as lithium is almost ubiquitous on Earth, but the pace of extraction/refinement is slow.”

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Volvo’s electric plans put it in direct competition with established carmakers such as Volkswagen, GM And strongholdSo does Tesla. Just this week, Ford CEO Jim Farley said his company plans to “Challenge Tesla and all comers to become the best electric car maker in the world.”

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During his CNBC interview, Volvo Cars’ Rowan was asked if there was hope that Musk’s Twitter takeover would be a distraction for Tesla’s CEO.

He replied, “I have no idea.” “I know one thing…I won’t be distracted by what we need to get done. And that, quite simply, is that we need to continue our path toward electrification.”

Rowan was speaking on the same day his company announced first-quarter results for 2022.

Revenue grew 8% to SEK 74.3 billion (about $7.56 billion). Earnings before interest and tax were 6 billion crowns, compared to 8.4 billion in the first quarter of 2021.

The company sold 148,295 vehicles in the first quarter, which it said represented a 20% decrease compared to the same period last year.

As with many businesses, supply chain issues continue to affect operations. “Semiconductor constraints have continued to gradually improve,” the company said.

“However, due to the temporary shortage of a semiconductor, production decreased at the end of the first quarter. This shortage is expected to continue into the second quarter.”

Looking ahead, the company said it expects “supply chains to improve in the second half of the year.”

—Chloe Taylor contributed to this article.

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