Volvo Signs 10-Year Battery Deal With CATL & LG Chem

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Volvo says half of its cars will be battery electrics by 2025 and the rest will be plug-in hybrids. Last year Volvo sold more than 630,000 cars worldwide. That means it is going to need lots and lots of battery cells to reach its goal.

Volvo battery supply fro Polestar
Polestar CEO Thomas Ingenlath with a Polestar 2 electric sedan. Credit: Polestar

Volvo announced a ten-year, multi-billion dollar deal with two battery cell manufacturers this week — China’s CATL and South Korea’s LG Chem. “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.”

Samuelson told CNBC on Wednesday, “That is really going to decide the pace we have in the transition, The supply of batteries will be crucial.” Volvo is building a battery assembly line in Ghent, where it will manufacture its new XC40 midsize battery electric SUV starting later this year, according to a report by Tech Crunch.

The company expects to begin production of the Polestar 2, a midsize 5-door hatchback sedan, beginning next year. It is easy to call every new car that appears a “Tesla fighter,” but that hackneyed term may actually apply to the Polestar 2.

Dimensionally and performance-wise, its specs are as near as dammit to the Model 3. It is a little faster than the SR and a little slower than the Performance version of that car. The hatchback may make it more appealing to some buyers and could even find favor with some potential Model Y customers.

“With these suppliers in place, we have the secure knowledge that our electric performance cars will be powered by high-quality batteries that our customers can rely on,” says Thomas Ingenlath, CEO of Polestar.

But more troubling than battery supply is the tariff fracas brewing between China and the United States. Volvo is targeting first year sales of the Polestar 2 of 50,000 cars — 40% to China, 30% to the US and Canada, and the rest to Europe, particularly Norway which has aggressive electric car incentives.

Ingenlath told the Los Angeles Times in a recent interview,“We would embrace free trade as in the interests of the consumer,” but won’t export to countries where tariffs make the MSRP of its vehicles “ridiculous.” Ahem…..he’s talking about the US, people. How many, if any, Polestar 2s come stateside will depend entirely on how long the current (as of today) US tariff on cars made in China remains at 25%.

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new."

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