Autos CEO warns of battery shortage as EV competitors heats up

The brand new CEO and president of Volvo Vehicles has predicted that shortage of battery provide will change into a urgent concern for his sector, telling CNBC the agency has made investments that may assist it achieve a foothold out there.

“Just lately, we made a fairly substantial funding with Northvolt, in order that we’re accountable for our personal battery provide as we go ahead,” Jim Rowan, who joined the enterprise final month, instructed CNBC’s “Squawk Field Europe” Thursday.

In March 2021, Volvo Vehicles stated it deliberate to change into a “totally electrical automobile firm” by the yr 2030, a transfer which would require it to have a constant and safe provide of batteries for its autos.

“I feel battery provide goes to be one of many issues that comes into scarce provide within the years to come back,” Rowan stated.

“And that is one of many causes we made that substantial funding with Northvolt: In order that we could be in management not simply of the availability, however we are able to really begin to develop our personal battery chemistry and manufacturing amenities.”

This might allow Volvo Vehicles to be “in full management of {that electrical} propulsion engine for the longer term,” he stated.

Gigafactory plans

In February, Volvo Vehicles and battery maker Northvolt stated they might construct a battery manufacturing plant in Gothenburg, Sweden, with development set to start in 2023. In accordance with the businesses, the power is about to “have a possible annual cell manufacturing capability of as much as 50 gigawatt hours.”

This might equate to supplying sufficient batteries for round 500,000 vehicles yearly, they stated. The corporations’ plans to develop a gigafactory had been beforehand introduced, though a selected location was not confirmed on the time.

Because the variety of electrical autos on our roads will increase, battery provide will change into an more and more essential — and aggressive — cog within the automotive sector.

Chatting with CNBC’s Annette Weisbach final yr, Volkswagen CEO Herbert Diess highlighted simply how essential battery manufacturing can be within the years forward, noting that challenges did exist.

“Batteries could be, for instance, a steady constraint for the expansion of EVs over the subsequent 5 to 10 years,” he stated.

“As a result of the lead instances are enormous. We want a lot power and cell manufacturing … [There is a] enormous provide chain which must be arrange throughout the subsequent years, and that may, that may, result in some constraints.”

Extra not too long ago, this month noticed Elon Musk spotlight the significance of lithium, a key a part of the batteries utilized in electrical autos. On April 8, the Tesla CEO tweeted that lithium’s price had “gone to insane levels!”

“Tesla would possibly really must get into the mining & refining straight at scale, until prices enhance,” Musk stated. “There isn’t any scarcity of the ingredient itself, as lithium is sort of in every single place on Earth, however tempo of extraction/refinement is sluggish.”

Volvo’s electrification plans put it in direct competitors with long-established automakers like Volkswagen, GM and Ford, in addition to Tesla. Simply this week, Ford CEO Jim Farley stated his enterprise deliberate to “problem Tesla and all comers to change into the highest EV maker on this planet.”

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

“I don’t know,” he replied. “I do know one factor … I cannot be getting distracted from what we have to get finished. And that’s, fairly merely, that we have to proceed our march in the direction of electrification.”

Rowan was talking on the identical day his enterprise introduced outcomes for the primary quarter of 2022.

Income grew by 8% to achieve 74.3 billion Swedish krona (round $7.56 billion). Earnings earlier than curiosity and taxes got here in at 6 billion krona, in comparison with 8.4 billion within the first quarter of 2021.

The corporate offered 148,295 vehicles within the first quarter, which it stated was a 20% drop in comparison with the identical interval final yr.

As with many companies, provide chain points proceed to impact operations. “Semiconductor constraints continued to steadily enhance,” the corporate stated.

“Nonetheless, resulting from a short lived scarcity of a selected semiconductor, manufacturing was down on the finish of the primary quarter. This scarcity is predicted to stay within the second quarter.”

Wanting forward, the enterprise stated it was anticipating “provide chains to enhance within the second half of the yr.”

—Chloe Taylor contributed to this text.