Northvolt, a Swedish EV battery maker, has made a significant decision to sell its stake in the Swedish battery-making joint venture, Novo Energy, to Volvo Cars. This move comes as Northvolt aims to refocus on its primary battery cell production business. The agreement between the two companies also includes exploring potential collaborations in North America.
The decision to sell the stake in Novo Energy was prompted by Northvolt’s need to prioritize its core business activities, particularly in light of its current status under US bankruptcy protection. As a result, Northvolt ceased funding most of its joint ventures, including Novo, throughout 2024. This led to Volvo Cars declaring Northvolt in breach of contract in October and subsequently deciding to acquire Northvolt’s stake in Novo.
While the financial details of the transaction have not been disclosed, the sale is subject to approval by a US bankruptcy court. This divestment is part of a broader strategy by Northvolt to offload projects and businesses, including those in Poland and Norway, in order to reduce costs and focus on its battery plant in northern Sweden.
On the other hand, Volvo Cars will now take full ownership of Novo Energy, a joint venture established in 2022 to develop and produce advanced batteries specifically for Volvo vehicles. Novo Energy set up an R&D center in Gothenburg, Sweden, to enhance battery technology and vehicle integration. The joint venture started construction on its first gigafactory in 2023, which is expected to have a capacity of up to 50 GWh per year.
Volvo Cars reassured that the sale of Northvolt’s stake in Novo Energy will not impact its other planned investments or cash flow goals. The completion of the deal will also resolve any outstanding claims between Volvo Cars and Northvolt.
Additionally, Northvolt is actively seeking new investors and funding to sustain its operations beyond February. In line with its cost-cutting measures, Novo Energy recently announced a 30% reduction in its workforce.
Overall, these strategic decisions by Northvolt and Volvo Cars reflect the evolving landscape of the electric vehicle industry and the importance of focusing on core business activities to ensure long-term sustainability and growth.
