Volvo Car Group signs multi-billion dollar battery supply deals
Volvo Car Group has signed long-term agreements with leading battery makers CATL and LG Chem to ensure the multi-billion dollar supply of lithium-ion batteries over the coming decade for next-generation Volvo and Polestar models.
The agreements cover the global supply of battery modules for all models on the upcoming SPA2 and the existing CMA modular vehicle platforms and represent a major step towards realising Volvo Cars’ ambitious electrification strategy.
In 2017, Volvo Cars made the industry-leading commitment that all new Volvo cars launched from 2019 would be electrified. The company has since reinforced this strategy by stating that it aims for fully electric cars to make up 50 per cent of its global sales volume by 2025.
“The future of Volvo Cars is electric and we are firmly committed to moving beyond the internal combustion engine,” said Håkan Samuelsson, President and CEO of Volvo Cars.
“Today’s agreements with CATL and LG Chem demonstrate how we will reach our ambitious electrification targets.”
CATL of China and LG Chem of South Korea are renowned battery manufacturers, both of which have long and successful track records supplying lithium-ion batteries to the global automotive industry. They fulfil Volvo Cars’ strict sourcing guidelines in terms of technology leadership, responsible supply chains and competitive cost models. In China, battery supply will benefit from the scale of the wider Geely Group.
“With today’s agreement we effectively secured our battery supply for the upcoming decade,” said Martina Buchhauser, Senior Vice President for Procurement at Volvo Cars. “By having two suppliers available in each region we also ensure that we have flexibility in our supply chain going forward.”
Volvo Cars’ first battery assembly line is currently under construction at its manufacturing plant in Ghent, Belgium, and will be finalised by the end of this year. The first fully electric Volvo to be built in Ghent will be the award-winning XC40 small SUV; plug-in hybrid variants of the XC40 are already manufactured there.
The Compact Modular Architecture platform currently underpins the XC40, as well as the fully electric Polestar 2 fastback and several models sold by LYNK & CO, Volvo’s sister brand which it co-owns with Geely. As of this year, all three models will be built on a single production line at a Volvo-operated manufacturing plant in Luqiao, China.
The upcoming SPA2 architecture is the next generation of Volvo’s in-house-developed Scalable Product Architecture platform and will be launched early next decade. SPA is one of the most advanced vehicle platforms in the car industry and currently underpins all Volvo models in the 60 and 90 series. The first Volvo to be launched on SPA2 will be the next generation of the XC90 large SUV.
Earlier this year, Volvo Cars revealed a number of upgraded and newly developed electrified powertrain options, to be made available across its entire model range in due course. It has also upgraded its existing T8 Twin Engine plug-in hybrid powertrain, with plug-in options now available on every model it produces.