Autos CEO warns of battery shortages as EV competition intensifies
Volvo Cars said in 2021 that it plans to become a “100% electric vehicle company” by 2030, which will require it to provide a stable and reliable supply of batteries for its vehicles.
Peerapon Boonyakiat / SOPA Images | Light rocket | Getty Images
The new CEO and president of Volvo Cars has predicted battery shortages will be a pressing issue for his sector, telling CNBC that the firm has made investments that will help it gain a foothold in the market.
“We recently made a significant enough investment in Northvolt that we can control our own battery supply as we move forward,” said Jim Rowan, who joined the business last month, in an interview with CNBC’s Squawk Box Europe on Thursday.
In March 2021, Volvo Cars said it plans to become a “100% electric vehicle company” by 2030, which will require it to provide a stable and reliable supply of batteries for its vehicles.
“I think battery stock is going to be one of the scarce commodities in the coming years,” Rowan said.
“And that’s one of the reasons we’ve made such a significant investment in Northvolt: so we can control not only supply, but actually start developing our own battery chemistry and manufacturing capabilities.”
This will allow Volvo Cars “to have full control of the electric propulsion in the future,” he said.
Gigafactory Plans
In February, Volvo Cars and battery maker Northvolt said they would build a battery factory in Gothenburg, Sweden, with construction due to begin in 2023. up to 50 gigawatt-hours.
According to them, this will be equivalent to supplying enough batteries for about 500,000 cars a year. The firms’ plans to set up a gigafactory had been previously announced, although a specific location was not confirmed at the time.
As the number of electric vehicles on our roads increases, the supply of batteries will become an increasingly important and competitive factor in the automotive sector.
Speaking to CNBC’s Annette Weisbach last year, Volkswagen CEO Herbert Diess stressed how important battery production will be in the coming years, noting that problems do exist.
“Batteries could be, say, a permanent hurdle to electric vehicle growth over the next five to 10 years,” he said.
“Because delivery times are huge. We need so much energy and cell production… [There is a] a huge supply chain that needs to be built in the coming years and this could lead to some restrictions.”
As recently as this month, Elon Musk highlighted the importance of lithium, a key part of batteries used in electric vehicles. April 8 Tesla CEO tweeted that the price of lithium “went to insane levels!”
“Tesla may have to go directly into mining and refining at scale unless costs improve,” Musk said. “There is no shortage of the element itself, as lithium is found almost everywhere on Earth, but extraction/refining rates are low.”
Volvo’s electrification plans put it in direct competition with long-established automakers such as Volkswagen, GM and Ford, as well as Tesla. Just this week, Ford CEO Jim Farley said his business plans to “challenge Tesla and everyone else to become the world’s leading electric vehicle maker.”
During an interview with CNBC, Volvo Cars’ Rowan was asked if there was hope that Musk’s takeover of Twitter would distract the Tesla CEO.
“I have no idea,” he replied. “I know one thing… I will not be distracted from what we need to do. And it’s just that we need to continue our journey towards electrification.”
Rowan spoke on the same day his company announced first quarter 2022 results.
Revenue grew by 8% and reached 74.3 billion Swedish kronor (about 7.56 billion dollars). Earnings before interest and taxes amounted to 6 billion kroons, compared to 8.4 billion kroons in the first quarter of 2021.
The company sold 148,295 vehicles in the first quarter, down 20% from the same period last year, it said.
As with many other companies, supply chain issues continue to affect operations. “Restrictions for semiconductors continued to gradually improve,” the company said in a statement.
“However, due to a temporary shortage of a certain semiconductor, production declined at the end of the first quarter. This deficit is expected to continue in 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.
