Volvo Group Receives EU Innovation Support for CarbonSmart Initiative

GOTHENBURG, Sweden, June 24, 2025 /PRNewswire/ -- Volvo Group's engine plant in Skövde, Sweden, has been awarded up to €49 million from the EU Innovation Fund to support the CarbonSmart Factory project: SPACE. This initiative aims to advance Volvo's transformation through net-zero innovation and clean technology.

"We transition towards sustainable foundry operations by electrifying key processes and integrating AI technologies, reducing CO₂ emissions by 88% from our manufacturing process. This project is a vital part of Volvo Group's journey towards net-zero emissions." says Rickard Lundberg, Vice President Powertrain Production Skövde Plant.

The initiative is an ambitious transformation project aiming for significant reduction of CO₂ emissions from manufacturing processes within Skövde Plant. With support from the EU, the plant will become a pioneering example of decarbonized heavy manufacturing.

Driving Industry Leadership in Sustainability

Central to this transformation is the integration of green technologies, including:

• Electric furnaces powered by green electricity
• Hydrogen replacing propane, as a fossil-free fuel alternative
• Advanced heat recovery systems to capture and reuse energy
• Cutting-edge AI-powered energy management to optimize energy use across operations

The project will also introduce three innovative solutions for energy storage, allowing the plant to balance energy use and production.

1. Iron Battery: Uses existing furnaces to store energy for high-demand times.
2. Hydrogen Battery: Uses green hydrogen, adding possibilities to store energy seasonally.
3. Water Battery: Reuses hot water to reduce energy needs for heating and melting processes.

Together, these systems will allow the plant to balance energy use and production, improving operational flexibility while addressing grid capacity limitations that many large-scale electrification projects face.

The Skövde plant is conditionally granted up to €49M by Innovation Fund, European Commission. The project is preceded by a prestudy conducted together with Skövde Energi and AI Sweden, funded by Advanced Digitalization through Vinnova.

June 24, 2025

For more information, contact:

Rickard Lundberg
VP Powertrain Production Skövde Plant 
[email protected]
+46 790 62 43 78

Maria Hillerström
Manager Communication Strategy Skövde Plant
[email protected]
+46 735 58 84 97

Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Climate, Infrastructure and Environment Executive Agency (CINEA). Neither the European Union nor the granting authority can be held responsible for them.

Funded by the European Union
Emission Trading System
Innovation Fund

For more information, please visit volvogroup.com 
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The Volvo Group drives prosperity through transport and infrastructure solutions, offering trucks, buses, construction equipment, power solutions for marine and industrial applications, financing and services that increase our customers' uptime and productivity. Founded in 1927, the Volvo Group is committed to shaping the future landscape of sustainable transport and infrastructure solutions. The Volvo Group is headquartered in Gothenburg, Sweden, employs more than 100,000 people and serves customers in almost 190 markets. In 2024, net sales amounted to SEK 527 billion (EUR 46 billion). Volvo shares are listed on Nasdaq Stockholm.

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