Northvolt To Cut Jobs and Delay Battery Gigafactory Projects

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Europe's only homegrown battery cell maker, Northvolt (Stockholm, Sweden), is to cut jobs, delay future gigafactory projects and potentially sell off one of its divisions in order to survive the slump in European electric vehicle (EV) sales.

The Swedish company confirmed that it will focus its efforts on large-scale cell manufacturing while pausing its cathode active material production in Borlange, Sweden, a move that will see it buying from Chinese or Korean suppliers. The severity of proposed job cuts to its 5,500-strong workforce will be revealed later this Autumn as the company refocuses. The company has experienced issues ramping up production at its main plant, Northvolt Ett, in Skellefteå in northern Sweden. The plant has an annual capacity of 16 gigawatt-hours (GWh) but is producing roughly 1 GWh and only sees that increasing to a few GWh next year. In July, the company also lost a contract worth more than US$2 billion with German automaker BMW (Munich, Germany). At the time, Manager Magazine, which revealed the canceled order, claimed the decision was down to a two-year delay in Northvolt ramping up production and that the cells did not reach BMW's quality standards. For additional information, see July 3, 2024, article - Northvolt Loses $2 Billion BMW Contract for EV Batteries.

"With the strategic review now underway, 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," said Peter Carlsson, chief executive officer and co-founder of Northvolt. "While conditions at this time are challenging, there remains no question that the global transition towards electrification--and the long-term outlook for cell manufacturers, including Northvolt--is strong."

The company is backed by a number of key companies, including leading automakers like BMW and Volkswagen AG (VW) (Wolfsburg, Germany) and Volvo Cars (Gothenburg, Sweden), and has raised roughly US$15 billion in financing. However, Europe's EV sector has suffered a slump in sales in the first half of this year, causing many companies Northvolt is working with to review their strategies. VW is looking at making its first ever plant closures in Germany as European EV sales slow and Asian competition stiffens, while Volvo recently abandoned its goal of being an EV-only car company by 2030.

To date, the Northvolt Ett plant is the only fully operational gigafactory. The company is constructing two others, Northvolt Six in Canada and Northvolt Drei in Heide, northern Germany. Construction of the 5 billion-euro ($5.4 billion) Heide gigafactory got underway in April, with the help of a generous financial package from the German government. It will have a potential annual production capacity of 60 GWh--enough for roughly 1 million EVs--and will employ more than 3,000 people when it starts operations in 2026. For additional information, see April 9, 2024, article - Northvolt Starts Work on German Battery Gigafactory.

Carlsson added: "As difficult as this will be, focussing on what is our core business paves the way for us to build a strong long-term foundation for growth that contributes to the Western ambitions to establish a homegrown battery industry."

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