Autos CEO warns of battery supply scarcity as EV competition heats up

In 2021, Volvo Automobiles mentioned it deliberate to grow to be a “absolutely 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 Automobiles has predicted that shortage of battery provide will grow to be a urgent problem for his sector, telling CNBC the agency has made investments that will assist it achieve a foothold available in the market.

“Just lately, we made a fairly substantial funding with Northvolt, in order that we’re accountable for 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 grow to be a “absolutely 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.

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

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

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

Gigafactory plans

In February, Volvo Automobiles and battery maker Northvolt mentioned they’d construct a battery manufacturing plant in Gothenburg, Sweden, with development set to start in 2023. In keeping with the businesses, the power is ready 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 automobiles 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 grow to be an more and more necessary — and aggressive — cog within the automotive sector.

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

“Batteries may be, for example, a steady constraint for the expansion of EVs over the subsequent 5 to 10 years,” he mentioned.

“As a result of the lead instances are enormous. We’d like a lot vitality and cell manufacturing … [There is a] enormous provide chain which needs to be arrange throughout 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 truly should get into the mining & refining immediately at scale, except prices enhance,” Musk mentioned. “There is no such thing as a scarcity of the factor 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 “problem Tesla and all comers to grow to be the highest EV maker on the earth.”

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 can’t be getting distracted from what we have to get finished. And that’s, fairly merely, that we have to proceed our march in the 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 achieve 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 automobiles 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 affect operations. “Semiconductor constraints continued to steadily enhance,” the corporate mentioned.

“Nonetheless, as a result of a short lived scarcity of a selected semiconductor, manufacturing was down on the finish of the primary quarter. This scarcity is anticipated to stay within the second quarter.”

Wanting 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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