The effects of Gothenburg’s new battery factory

Northvolt and Volvo Cars new battery manufacturing plant to be built in Torslanda, Gothenburg
Northvolt and Volvo Cars new battery manufacturing plant to be built in Torslanda, Gothenburg. Credit: Northvolt and Volvo Cars

Volvo Cars and Northvolt's battery production plant will generate thousands of new jobs in Sweden, especially in and around Gothenburg. This, in turn, brings with it challenges in terms of housing and skills supply. The factory also creates opportunities for innovation. Above all, however, it will make Gothenburg and western Sweden more attractive. 

The opening of a battery factory in Gothenburg by Volvo Cars and Northvolt will have a major impact on the city and the region. One of the main effects is the number of new jobs – production will employ up to 3,000 people. The initiative also includes a research and development centre that will develop tomorrow's batteries, with an additional 300 jobs planned. 

Business Region Göteborg expects that the factory's establishment will bring a total of about 6,000 new jobs to the region as a whole, as well as another 4,000 jobs in the rest of Sweden. 

“Converted into tax revenues, this represents SEK 700-800 million a year. This is a big part of the industrial change that is taking place towards a successful business community in Gothenburg and Sweden,” says Patrik Andersson, CEO of Business Region Göteborg. 

Increased attractiveness for the region 

The West Sweden Chamber of Commerce also welcomed the news that the factory will be located in the region. 

"We have a fantastic boost in this area through other previous establishments, and our region is already a hub for vehicle electrification. This is another vitamin injection and it will contribute greatly to Gothenburg’s attractiveness. Many people will want to come here and experience this period of development,” says Johan Trouvé, CEO of the West Sweden Chamber of Commerce. 

“Together we need to make Gothenburg an interesting place and make sure that the outside world becomes aware of it. It should feel exciting for our young people and they should want to stay here.”  

Patrik Andersson agrees that Gothenburg is already a centre for this type of business. 

“This affects the entire green transition, and it is in line with the City of Gothenburg's ambition to be a leader in this field, which is extremely positive. Clearly, it increases Gothenburg's attractiveness and will turn Gothenburg into one of the world's leading automotive clusters,” he says. 

Innovation and sustainability

Darja Isaksson is Director General of Vinnova, Sweden's Innovation Agency, whose mission is to strengthen Sweden's innovation capacity and contribute to sustainable growth. She believes that the battery factory is part of a fast-growing and relatively new industry in Sweden and Europe and that it creates both demand – and opportunities – for innovations. 

“It creates a demand for circularity innovations, such as innovations in sustainable industry, how to extract minerals from the ground and innovations in production. Electrification itself also creates opportunities for innovations in transport and sustainable energy systems,” she says. 

“The aim is to achieve fossil-free mobility systems. It is a key part of the global sustainability transition that we need to achieve. To achieve the necessary transformation in sustainability, we need to transform all aspects - food, mobility, energy systems and so on,” says Darja Isaksson, adding:

“We must be within the limits of the planet and we must achieve this quickly. In the climate change transition we are aiming for now, the planet is setting non-negotiable deadlines. We have a lot of technology and knowledge, and the development of electrification is valuable, but it places demands on how we work together and we really need to accelerate even more.” 

New challenges for suppliers

The many new jobs associated with the battery factory create ripple effects in other areas of expertise. 

“What is now emerging can, does and must contribute to more sustainable and resilient solutions. We need value chains that are sustainable from the planet's perspective, but that can also withstand other types of challenges – such as geopolitical events and the consequences of the climate crisis,” says Darja Isaksson. 

The establishment of the plant will affect suppliers to the automotive industry and they will need to convert to electrified cars in order to remain relevant as suppliers. The 6,000 new jobs in the region also include new suppliers. More of these will need to be established in western Sweden and Gothenburg. 

“The factory will be a huge addition and an advantage for the suppliers – provided they change. It also becomes easier for them as the battery factory is around the corner rather than the other side of the world,” says Patrik Andersson. 

Labour and international skills

During the establishment process, Business Region Göteborg led the region's work, which eventually resulted in Northvolt and Volvo Cars choosing Gothenburg as their location. 

“We have completed the argument and the negotiation stage on why Gothenburg is the best option – now comes the implementation. We have made a promise to Northvolt and Volvo Cars that the City of Gothenburg will coordinate this until 2029, and have therefore recruited a project manager for this purpose,” says Patrik Andersson. 

Business Region Göteborg has also recruited a person who will coordinate the work on skills supply and education.

“We need to think in terms of various steps and dimensions. People will be needed in everything from research to pure production. There is no other labour market region with as much strength linked to the skills that are in demand as we have here in Gothenburg and western Sweden. There is no other automotive cluster of this magnitude anywhere else,” says Patrik Andersson and continues:

“This is a great opportunity to educate people who can enter and work in this fine industry. It will also require people to move here to work in production or at the R&D centre. This implies challenges, of course, but few regions are as well placed to meet them as we are.”

International House Gothenburg exists since April 2021 to attract workers from other countries and make the process smoother for international expertise to establish themselves here. This is a meeting place for international labour offering activities, guidance and help to enter Swedish society. It is run by the City of Gothenburg through Business Region Göteborg in cooperation with the Labour Market and Adult Education Administration, Västra Götaland Region and Move to Gothenburg. 

“It's a path into the Swedish system, and this assistance help can shorten the time it takes to feel comfortable in Sweden and Gothenburg,” says Patrik Andersson. 

Higher pressure on housing construction

Most of those who will work at the factory and R&D centre are probably already living in western Sweden. However, many people will also have to move to Gothenburg and the region, resulting in an increased housing need. In the documentation presented to Volvo Cars and Northvolt, Business Region Göteborg was able to show that the production of new homes in the region has doubled since a few years back.

“It is necessary to maintain the pace of production at this level and perhaps even increase it a little. Employment growth is very high and housing construction is very important to provide housing for newcomers. It is crucial that it does not fall to the levels it was at a few years ago,” says Patrik Andersson. 

Between 2022 and 2030, 7,000–8,000 new homes will be completed annually in the Gothenburg region. The assessment is that this will be sufficient for those who will work at the factory. But even before the factory opens in 2025, labour is needed to build these. Around 2,500 construction workers will be employed, who will need housing during the construction period. 

“This will be partly solved by establishing temporary housing in the vicinity of the factory,” says Patrik Andersson. 

Greater demands on electricity capacity

Another effect of the battery factory under construction in Gothenburg is a higher demand for electricity capacity. In the response documents presented to Volvo Cars and Northvolt, Göteborg Energi together with Vattenfall presented an attractive offer with sufficient capacity. 

“We will solve it for this establishment, but going forward it is one of the major challenges in Sweden overall, because electrification is such a big issue in many areas now. The challenges lie both in the capacity – that is, the size of the cable – and in the amount of green electricity produced,” says Patrik Andersson. 


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