Volvo, one of the first automakers to announce it would add electric power to its whole lineup, on Wednesday took the unusual step of formally announcing who will supply the batteries for all those electric cars.
The company stated that it will source $1 billion worth of lithium-ion batteries from two suppliers, LG Chem and Contemporary Amex Technology (CATL).
While the supply contract with Chinese CATL may have been predictable (Volvo is owned by Chinese automaker Geely, and CATL is one of the biggest players on the global stage). As competition for battery supplies heats up among automakers, it's also logical to name two suppliers. LG Chem supplies batteries for Volvo's current plug-in hybrids.
"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 in a statement. “By having two suppliers available in each region we also ensure that we have flexibility in our supply chain going forward.”
The batteries will go into Volvos based on two of the company's platforms: The Compact Modular Architecture that underpins the Polestar 2 and the Volvo XC40, will be the first. Those are the first two electric models from the company, with online preorders for the Polestar 2 already open and deliveries expected to begin next year. The XC40 electric is expected to debut late this year with deliveries following the Polestar 2.
Beyond that, Volvo's Scalable Product Architecture 2 that underpins the XC90 and XC60 SUVs will get the new batteries sometime after 2020.
The company is building its first battery assembly line at its existing auto factory in Ghent, Belgium. Volvo has said fully-electric cars will account for 50 percent of its sales by 2025. Volvo also announced that it is opening a new electric-car engineering center for Polestar in Coventry, England, to take advantage of engineering expertise there, the company said.
“The future of Volvo Cars is electric, and we are firmly committed to moving beyond the internal combustion engine,” said Volvo Cars CEO Håkan Samuelsson in a statement. “Today’s agreements with CATL and LG Chem demonstrate how we will reach our ambitious electrification targets."