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Volvo to acquire Northvolt's shares in battery JV

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Northvolt says it will stop funding of the venture

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Northvolt is currently seeking funding for itself

(Adds bullet points, Northvolt comment, background, detail in

paragraphs 2, 5-12)

COPENHAGEN, Oct 30 (Reuters) - Volvo Cars

said on Wednesday it will invoke a right to acquire Northvolt's

shares in their Swedish battery joint venture, NOVO Energy,

after Northvolt decided to no longer provide funding for it.

Northvolt this year has gone from being Europe's best shot

at a home-grown electric-vehicle battery champion to racing to

stay afloat by slimming down and cutting jobs, hobbled by

production problems and a lack of funding.

Volvo Cars, which is majority-owned by China's Geely

, and Northvolt formed a joint venture to build a

gigafactory to produce sustainable batteries for electric cars

in 2021. They later said the plant would be set up in Gothenburg

in southwest Sweden.

"Volvo Cars is evaluating any potential impact these

developments could have for NOVO Energy and is investigating

future scenarios to protect the investment," the Sweden-based

automaker said in a statement.

NOVO, with planned investments of 30 billion Swedish crowns

($2.8 billion), was intended to make battery cells specifically

developed for use in all-electric Volvo and Polestar cars, with

production expected to start in 2026, the companies said in

2021.

Luxury EV maker Polestar, also majority owned by China's

Geely, told Reuters in September that it has no orders with

Northvolt as it does not produce any models that need the type

of batteries Northvolt produces. Its CEO said this month the

company had launched a strategic review of its operations after

a 14% drop in third-quarter deliveries.

It was not immediately clear what the NOVO facility, which

is under construction, will be used for, Volvo said on

Wednesday.

"Any battery production at NOVO Energy is dependent on third

party or other partner involvement," Volvo said, adding it did

not see its vehicle roll-out plan being affected.

A NOVO spokesperson declined to comment.

Northvolt said in a separate statement it had chosen to halt

further capital investment into NOVO Energy, focusing instead on

its wholly owned cell operations.

The company has said it is in talks with investors and

lenders to secure funding and that it has made significant

progress towards a financing deal.

Volvo Cars CEO Jim Rowan said this month the company would

not put any money into Northvolt.

($1 = 10.6305 Swedish crowns)