German automaker Volkswagen invests $620 million in Northvolt to secure EV battery supply
German automobile manufacturer Volkswagen has invested additional $620 million in Northvolt, a Swedish battery manufacturer having specialization in electric vehicle (EV) lithium-ion technology, to secure adequate cell capacity for its EV push. The investment has been made as part of the Swedish battery manufacturer’s latest $2.75 billion funding round. It isn’t the first investment made by Volkswagen in Northvolt. In 2019, the company had invested 900 million euro ($1090 million) in the battery business. Now, the German automaker owns roughly 20 per cent stake in the EV battery company.
Proceeds from the latest funding round will be used by the Swedish battery manufacturer to boost its research & development (R&D) as well as to expand its capacity in the areas of production and recycling.
Arno Antlitz, chief financial officer for Volkswagen, said in a statement that the latest investment would strengthen its strategic partnership with the Swedish manufacturer and smooth supply of sustainable battery cells as it is accelerating its push from the conventional internal combustion engines (ICEs) to environment-friendly EVs.
When asked for a comment on the investment, Antlitz said, “With this investment, we are strengthening our strategic partnership with Northvolt as a supplier of sustainable battery cells which are produced using renewable energy and are comprehensively recyclable.”
Under the terms of the deal, Northvolt will start manufacturing battery cells for the German automobile giant by 2023. The Swedish battery cell manufacturer aims to increase capacity to up to 40 gigawatt hours (GWh) per annum over time.
Investment in Northvolt effectively forms the very first of six gigafactories that Volkswagen wants to launch in Europe by the end of current decade (2030).
The German auto giant’s increasing investments in battery business is apparently part of its efforts to overtake Tesla Motors as the world's largest player in the EV space.
For the last many years, Volkswagen is making diverse efforts to shift its business from individual mobility to systematically align with electric drives. The auto giant aims to launch almost 70 new electric car models within next ten years. Previously, it had set a goal to produce and launch 50 electric models. Consequently, the projected number of EVs to be built on Volkswagen’s electric platforms within the next decade will soar from roughly 15 million units to 22 million units. The automaker has repeatedly stressed that it remains fully committed to the Paris climate targets.
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