*

Volvo Cars take fully over battery joint venture from

Northvolt

after contract breach

*

Decline to disclose price of sale

*

Northvolt attempt to divest most of joint venture

businesses to

avoid full collapse

*

Sold recycling joint venture to Norsk Hydro ( NHYKF ) earlier for 78

million Norwegian crowns

*

Northvolt explores potential North American supply

opportunities

with Volvo Cars

(Recasts to focus on Northvolt's business)

By Marie Mannes

STOCKHOLM, Jan 29 (Reuters) -

Northvolt agreed with Volvo Cars on Wednesday

to sell the battery maker's stake in their joint venture NOVO

Energy for an undisclosed sum and explore potential

collaborations in North America.

Northvolt, which is under U.S.

bankruptcy

protection, had ceased funding for most of its joint

ventures and non-core businesses, including Novo, throughout

2024 to sustain its primary business of battery cell production.

Due to this, the automaker found Northvolt in breach of

contract in October and said it would acquire the stake in Novo.

Both companies declined to comment on the financial

details of the agreement and the price of the stake sale.

Volvo Cars and Northvolt, once hailed as Europe's best

prospect for a domestic electric-vehicle (EV) battery champion,

formed

Novo in 2021 to build a battery factory in

Gothenburg

on Sweden's west coast.

The carmaker said in October it would need a new partner

to keep plans for the factory on track.

On Tuesday, a U.S. Bankruptcy judge

approved

Northvolt's sale of its stake in battery recycler Hydrovolt

to Norwegian aluminium maker Norsk Hydro ( NHYKF ), for 78

million Norwegian crowns ($6.79 million).

It will need to do the same with the Novo stake.

According to Northvolt's lawyers, discussions for its

long-term funding needs are ongoing, and the company plans to

raise near-term cash by divesting non-core businesses.

Northvolt is looking to

sell

its recycling business, Revolt, and its battery systems

business, Northvolt Industrial.

SUPPLY OPPORTUNITIES

Northvolt has struggled with

persistent

quality issues and troubles increasing production of its

battery cells, which caused BMW last year to cancel a

2 billion euro contract and other stakeholders to worry if

Northvolt would be able to meet its financial and production

targets.

While Volvo's takeover of Novo means that Northvolt

would lose out on its planned orders to the carmaker, the

Swedish companies on Wednesday agreed on a plan to explore

potential supply opportunities in North America.

"The framework agreement with Volvo Cars shows that

market interest in Northvolt remains strong, it now opens up a

path for supply opportunities in North America at Northvolt Six

in Montreal," a spokesperson said.

($1 = 0.9615 euros)