Volvo Cars will take full control of NOVO Energy, a battery joint venture it has with troubled Swedish battery manufacturer Northvolt.

The companies signed an undisclosed share purchase agreement, which will see Northvolt exiting the firm building a battery gigafactory in Gothenburg, Sweden. Because Northvolt has filed for bankruptcy protection in the US, a bankruptcy court in Texas will also have a say in the deal, in addition to the Inspectorate of Strategic Products in Sweden.

Volvo Cars doesn’t expect the transaction to impact its other planned investments or ambitions on cash flow. Once the deal is completed, there will be “no outstanding claims” between the companies, they say in a joint statement.

Construction of the NOVO gigafactory near Volvo Cars’ manufacturing plant started last March. The plant was planned to have a capacity of up to 50 gigawatt-hours a year. First production was scheduled for 2026.

However, with the financial constraints and technology hurdles faced by Northvolt, Volvo Cars is now investigating future scenarios to protect its NOVO investment, a spokesperson tells Kallanish. The timeline for the project is also being reviewed.

“Any battery production at NOVO is dependent on third-party or other partner involvement,” the spokesperson said when queried on whether Northvolt would remain the technology provider for cell production. “The building could be multifunctional and various options are being considered.”

Earlier this month, NOVO announced the implementation of organisational changes and cost reductions in response to “evolving market conditions and an amended business plan.” This includes a 30% job cut.

Last year, the JV said it would intensify recruiting in 2025 focusing on manufacturing roles to prepare for the start of production a year later. It said then that its workforce would double to 500 by the end of 2024.

The gigafactory project is intended to meet Volvo Cars’ battery needs, as the carmaker targets an all-electric future in the early 2030s. This year, the company expects electrified products to account for 50-60% of its global sales, increasing from 46% in 2024.

Volvo Cars and Northvolt also agreed to explore new collaboration, including potential future supply opportunities in North America.