Vehicles CEO warns of battery shortage as EV festival heats up

In 2021, Volvo Vehicles mentioned it deliberate to transform a “absolutely electrical automotive corporate” via the 12 months 2030, a transfer which would require it to have a constant and safe provide of batteries for its cars.

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The brand new CEO and president of Volvo Vehicles has predicted that shortage of battery provide will transform a urgent factor for his sector, telling CNBC the company has made investments that will lend a hand it achieve a foothold available in the market.

“Lately, we made a relatively really extensive funding with Northvolt, in order that we’re in keep an eye on of our personal battery provide as we move ahead,” Jim Rowan, who joined the trade remaining month, instructed CNBC’s “Squawk Field Europe” Thursday.

In March 2021, Volvo Vehicles mentioned it deliberate to transform a “absolutely electrical automotive corporate” via the 12 months 2030, a transfer which would require it to have a constant and safe provide of batteries for its cars.

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

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“And that is the reason one of the vital causes we made that really extensive funding with Northvolt: In order that we will be in keep an eye on no longer simply of the provision, however we will if truth be told begin to increase our personal battery chemistry and manufacturing amenities.”

This may permit Volvo Vehicles to be “in whole keep an eye on of {that electrical} propulsion engine for the long run,” he mentioned.

Gigafactory plans

In February, Volvo Vehicles and battery maker Northvolt mentioned they’d construct a battery production plant in Gothenburg, Sweden, with building set to start out in 2023. In keeping with the firms, the ability is about to “have a possible annual mobile manufacturing capability of as much as 50 gigawatt hours.”

This may equate to supplying sufficient batteries for round 500,000 vehicles annually, they mentioned. The companies’ plans to increase a gigafactory were up to now introduced, even if a particular location was once no longer showed on the time.

Because the collection of electrical cars on our roads will increase, battery provide will transform an an increasing number of essential — and aggressive — cog within the car sector.

Chatting with CNBC’s Annette Weisbach remaining 12 months, Volkswagen CEO Herbert Diess highlighted simply how essential battery manufacturing could be within the years forward, noting that demanding situations did exist.

“Batteries may well be, let’s assume, a continuing constraint for the expansion of EVs over the following 5 to 10 years,” he mentioned.

“Since the lead occasions are massive. We’d like such a lot power and mobile manufacturing … [There is a] massive provide chain which must be arrange throughout the subsequent years, and that may, that may, lead to a few constraints.”

Extra lately, this month noticed Elon Musk spotlight the significance of lithium, a key a part of the batteries utilized in electrical cars. On April 8, the Tesla CEO tweeted that lithium’s value had “long past to insane ranges!”

“Tesla may if truth be told must get into the mining & refining at once at scale, except prices strengthen,” Musk mentioned. “There’s no scarcity of the part itself, as lithium is nearly 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 festival with normal automakers like Volkswagen, GM and Ford, in addition to Tesla. Simply this week, Ford CEO Jim Farley mentioned his trade deliberate to “problem Tesla and all comers to transform the highest EV maker on the earth.”

All through his interview with CNBC, Volvo Vehicles’ Rowan was once requested if there was once a hope Musk’s takeover of Twitter would turn out to be a distraction for the Tesla CEO.

“I do not know,” he responded. “I do know something … I can no longer be getting distracted from what we want to get achieved. And that’s, slightly merely, that we want to proceed our march against electrification.”

Rowan was once talking at the similar day his trade introduced effects for the primary quarter of 2022.

Income grew via 8% to succeed in 74.three billion Swedish krona (round $7.56 billion). Income earlier than passion and taxes got here in at 6 billion krona, in comparison to 8.four billion within the first quarter of 2021.

The corporate offered 148,295 vehicles within the first quarter, which it mentioned was once a 20% drop in comparison to the similar duration remaining 12 months.

As with many companies, provide chain problems proceed to impact operations. “Semiconductor constraints persevered to step by step strengthen,” the corporate mentioned.

“On the other hand, because of a brief scarcity of a particular semiconductor, manufacturing was once down on the finish of the primary quarter. This scarcity is predicted to stay in the second one quarter.”

Taking a look forward, the trade mentioned it was once anticipating “provide chains to strengthen in the second one part of the 12 months.”

—Chloe Taylor contributed to this text.

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