Chinese automaker Volvo Cars said on Wednesday that it will invoke its redemption rights to buy Northvolt’s share in Novo Energy, a battery-making company they started together in Sweden.
“This action follows a breach of the parties’ shareholders’ agreement where Northvolt AB has not fulfilled its financing obligations,” said Volvo in a statement.
Volvo Cars formed the Novo Energy joint venture in 2021 with Northvolt to build a gigafactory in Gothenburg in southwest Sweden, aiming to produce batteries for electric cars.
In September 2023, the venture started work in its cell factory, which was designed for a capacity of up to 50 gigawatt-hours.
Northvolt was once known for its commitment to creating the world’s greenest battery with minimal carbon footprint and high recycling ambitions.
However, the joint venture faced significant challenges due to financial issues on the part of Northvolt when it decided to halt further capital investment into the joint venture, focusing instead on its wholly owned cell operations.
“Volvo Cars is evaluating any potential impact these developments could have for Novo Energy and is investigating future scenarios to protect the investment,” the statement said.
The auto manufacturer also clarified that it will not be realizing battery cell production alone but only with a partner.
“Any battery production at Novo Energy is dependent on third-party or other partner involvement,” added Volvo.
It further said that when Volvo Cars reaches full ownership, the move is not expected to impact its other planned investments or its targets on cash flow.
The company presently has battery supply deals with LG and CATL.
