Volvo Cars wants to completely take over the battery cell joint venture Novo Energy, which is operated together with Northvolt. The reason is that Northvolt has failed to fulfil its financial obligations.

Wednesday Volvo announced in a short statement that it will exercise its buy-back right to acquire Northvolt’s shares in Novo Energy .“This action follows a breach of the parties’ shareholders’ agreement where Northvolt AB has not fulfilled its financing obligations,” it says. The intention is to “have a constructive dialogue” with Northvolt on the matter.

The deteriorating financial situation at the Swedish battery manufacturer has been clear for several weeks. On Tuesday it was announced that Northvolt could conclude a rescue financing round of 300 million dollars as early as next week. The Volvo announcement now suggests that Northvolt has already been unable to make all the agreed payments or investments in the past.

Future is unclear

It is unclear what will happen with Novo Energy. According to Volvo, it is investigating “future scenarios to protect the investment.” The joint venture was founded in 2022 to jointly produce battery cells for electric cars from Volvo (and potentially other Geely brands). In September 2023, work began on the cell factory in Gothenburg, which was designed for a capacity of up to 50 GWh.

However, Volvo makes it clear that it will not be realising battery cell production on its own, but only with a partner: “Any battery production at NOVO Energy is dependent on third party or other partner involvement.” Also it is not ruled out that no battery cells will be built there at all, as the building could be multifunctional,” according to Volvo. However, all options for future utilisation are based on the assumption that “Volvo Cars reaches full ownership.”

Volvo Cars also said that it will not be purchasing any battery cells from the Northvolt joint venture; production was scheduled to start in 2026. This will now happen (if at all) with another partner and probably with a delay that is not yet foreseeable. Volvo emphasises that it has a resilient battery suppy chain and that the plans for the market launch of vehicles “will not be affected.”