Swedish battery manufacturer Northvolt AB is taking drastic measures to stabilize its financial situation, including pausing production at its flagship factory and implementing job cuts due to operational challenges and decreased demand for electric vehicles (EVs). The company’s initial steps in its strategic review also involve seeking partners for its facilities in Poland, though the exact number of job reductions from its approximately 6,000 employees has not been disclosed. Additionally, Northvolt has sold a Swedish site initially intended for cathode material production, a crucial precursor for battery manufacturing.
Peter Carlsson, Northvolt’s CEO, stated, “We are having to take some tough actions for the purpose of securing the foundations of Northvolt’s operations to improve our financial stability and strengthen our operational performance.” The company is temporarily halting operations at its Northvolt Ett Upstream 1 cathode material facility until further notice.
As Europe’s largest homegrown battery manufacturer, Northvolt has faced difficulties scaling up production at its main factory near Skelleftea, Sweden. These issues, coupled with a challenging market environment, have led the company to delay its initial public offering to next year.
The broader market for battery makers is also under pressure due to a slump in EV sales. Major automotive companies like Volkswagen AG, Stellantis NV,and Mercedes-Benz Group AG have scaled back or refocused their battery projects this year.
Despite the setbacks, Northvolt remains committed to its facilities NOVO in Sweden, Northvolt Drei in Germany and Northvolt Six in Canada. The company is in close dialogue with key stakeholders and will provide updates on potential timeline revisions and further cost-saving measures in the fall.
Northvolt’s main site began producing its first batteries in May 2022, but scaling up has faced numerous challenges. In June, BMW AG canceled a €2 billion ($2.2 billion) order, and earlier this year, Volkswagen’s Scania reported slow deliveries.
The European EV market has also struggled due to a lack of affordable models, reduced government incentives, and increasing competition from Chinese and American manufacturers. BYD Co. and Tesla Inc. now outsell local producers combined. Northvolt, founded by former Tesla executives, had Volkswagen as its largest individual shareholder with a 21% stake at the end of last year, while Goldman Sachs Asset Management held about 19%, Vargas Holding AB’s Harald Mix had around 7%, and Northvolt managers and staff collectively owned about 9%, according to its 2023 annual report.
On the same day, a report by former European Central Bank President Mario Draghi criticized the EU’s automotive sector, highlighting the risk of losing market share to China. The report described the industry as a “key example of a lack of EU planning,” noting that China leads in nearly all aspects of automotive production while maintaining lower costs.
