Autos CEO warns of battery supply scarcity as EV competition heats up

The new CEO and president of Volvo Cars has predicted that scarcity of battery supply will become a pressing issue for his sector, telling CNBC the firm has made investments that would help it gain a foothold in the market.

“Recently, we made a reasonably substantial investment with Northvolt, so that we are in control of our own battery supply as we go forward,” Jim Rowan, who joined the business last month, told CNBC’s “Squawk Box Europe” Thursday.

In March 2021, Volvo Cars said it planned to become a “fully electric car company” by the year 2030, a move which will require it to have a consistent and secure supply of batteries for its vehicles.

“I think battery supply is going to be one of the things that comes into scarce supply in the years to come,” Rowan said.

“And that’s one of the reasons we made that substantial investment with Northvolt: So that we can be in control not just of the supply, but we can actually start to develop our own battery chemistry and production facilities.”

This would enable Volvo Cars to be “in complete control of that electrical propulsion engine for the future,” he said.

Gigafactory plans

In February, Volvo Cars and battery maker Northvolt said they would build a battery manufacturing plant in Gothenburg, Sweden, with construction set to begin in 2023. According to the companies, the facility is set to “have a potential annual cell production capacity of up to 50 gigawatt hours.”

This would equate to supplying enough batteries for around 500,000 cars every year, they said. The firms’ plans to develop a gigafactory had been previously announced, although a specific location was not confirmed at the time.

As the number of electric vehicles on our roads increases, battery supply will become an increasingly important — and competitive — cog in the automotive sector.

Speaking to CNBC’s Annette Weisbach last year, Volkswagen CEO Herbert Diess highlighted just how important battery production would be in the years ahead, noting that challenges did exist.

“Batteries might be, let’s say, a continuous constraint for the growth of EVs over the next five to 10 years,” he said.

“Because the lead times are huge. We need so much energy and cell production … [There is a] huge supply chain which has to be set up within the next years, and that will, that might, lead to some constraints.”

More recently, this month saw Elon Musk highlight the importance of lithium, a key part of the batteries used in electric vehicles. On April 8, the Tesla CEO tweeted that lithium’s price had “gone to insane levels!”

“Tesla might actually have to get into the mining & refining directly at scale, unless costs improve,” Musk said. “There is no shortage of the…