Northvolt's Swedish plant has received a $14 billion battery cell order from Volkswagen.

Northvolt and Volkswagen announced big battery news as the duo are implementing changes to the previously announced business plans.

First of all, the Volkswagen Group is increasing its ownership in Northvolt (from initially planned 20% to an undisclosed level) and acquires Northvolt shares in a 50/50 joint venture "Northvolt Zwei" in Salzgitter, Germany.

The "Northvolt Zwei" plant (under development), located at one of Volkswagen's sites, was planned for 16 GWh annually (with potential for 24 GWh annually). The new target for Volkswagen's in-house battery cell plant is up to 40 GWh.

Volkswagen intends to start production of "the unified cell for the high-volume segment" in Salzgitter in 2025.

"The gigafactory currently operated by Volkswagen in Salzgitter will produce the unified cell for the high-volume segment from 2025 and develop innovations in process, design and chemistry."

Northvolt's Northvolt Ett plant in Skellefteå, Sweden will start battery cell production for Volkswagen in 2023, with a target of up to 40 GWh annually.

Northvolt announced that the German manufacturer has placed a $14 billion battery cell order for this site (over the next 10 years) and that Northvolt will be Volkswagen's "strategic lead supplier for premium battery cells."

"In response to increased demand, Volkswagen has decided to refocus the previous plan in relation to cell production and concentrate production of its premium cells in the Swedish gigafactory “Northvolt Ett” in Skellefteå in collaboration with Northvolt. The production of these cells is set to commence in 2023 and will be expanded gradually to an annual capacity of up to 40 GWh."

Northvolt adds that its total order backlog (contracts with key customers) is now above $27 billion, which means that €13 billion must be from other manufacturers (including €2 billion/$2.4 billion from BMW).

Volkswagen target for Europe: six gigafactories and 240 GWh total

In total, Volkswagen intends to establish (together with partners) six battery cell gigafactories in Europe by 2030, with total manufacturing capacity of up to 240 GWh per year by the time they are finally completed (40 GWh each).

Skellefteå and Salzgitter were named the first two, so now we are waiting for the next four, which probably will be established with various other battery suppliers.

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