WionDrive News Desk 
Northvolt, Europe’s leading contender in the electric vehicle (EV) battery market, has announced plans to reduce its workforce by approximately 1,600 employees at its Swedish headquarters. This reduction represents about 20 per cent of the company’s global staff, a move necessitated by ongoing production challenges, a slowdown in demand, and intensifying competition from Chinese manufacturers.
On Monday, the company revealed its decision to pause a major expansion project at its Northvolt Ett facility in Skelleftea, northern Sweden. This announcement follows recent strategic shifts within the organisation. Earlier this month, Northvolt streamlined its operations, moving away from its initial vision of being a comprehensive solution provider that covered everything from raw material production and battery manufacturing to end-of-life recycling.
Northvolt, which counts Volkswagen among its major stakeholders, has been at the forefront of a European movement to invest heavily in battery production. This initiative aims to support the continent’s automakers as they transition from traditional internal combustion engines to electric vehicles. However, the Swedish company has encountered setbacks, including delays in fulfilling orders. Difficulties in scaling up production led to BMW canceling a substantial USD 2 billion order in June.
The company’s revised strategy, as outlined on Monday, will prioritize ramping up the initial 16 gigawatt-hours (GWh) of annual battery cell production capacity at Northvolt Ett. Concurrently, it will shelve a construction project that had aimed to increase capacity by an additional 30 GWh.
At present, Northvolt’s production stands at less than 1 GWh, a far cry from its original ambition to manufacture batteries for over one million vehicles annually at a capacity of 60 GWh.
The EV market’s growth has not met the high projections set by some industry players. Additionally, the sector faces fierce competition from China, which, according to International Energy Agency data, dominates global battery cell production with an 85 per cent market share.
Peter Carlsson, Northvolt’s co-founder and CEO, expressed the company’s determination to overcome these challenges, saying, “We are resolved to surmount the obstacles we face and emerge as a stronger, more efficient organisation. Our immediate priority is to channel all our resources and investments into our core business.”
The company also announced that Northvolt labs, its research and development hub, will decelerate all programs and expansion plans while maintaining essential platforms. The announcement did not address the status of planned gigafactories in Germany and Canada, which may face postponement.
Evan Hartley, an analyst at Benchmark Mineral Intelligence, commended Northvolt’s approach, noting that their current level of ambition and realism is appropriate, as they’re not blindly forging ahead when faced with difficulties.
Despite securing orders exceeding USD 50 billion from customers including major investor Volkswagen, Northvolt continues to operate at a loss. This situation underscores Europe’s struggle to compete with dominant Chinese battery manufacturers such as CATL and BYD. The Swedish company has raised USD 15 billion in equity and debt financing from various sources, including Goldman Sachs (its second-largest investor) and BlackRock, as indicated in filings. It is currently seeking additional funding to support its expansion efforts.
Financial reports show that Northvolt’s losses increased from USD 285 million in 2021 to USD 1.2 billion in 2022. As of the end of 2023, the company had USD 2.13 billion in cash reserves.
The challenges faced by Northvolt reflect broader concerns about Europe’s economic competitiveness. Former European Central Bank President Mario Draghi recently emphasised the need for a more coordinated industrial policy and substantial investment to keep pace with the United States and China. However, many European governments are grappling with financial constraints following the COVID-19 pandemic and sluggish economic growth.
Swedish Prime Minister Ulf Kristersson stated on September 13 that while the government supports the success of companies in green technologies, it would not take a stake in Northvolt or provide loans to the company.
In response to these developments, Carlsson emphasised the importance of collaboration among all stakeholders. He stated, “Looking ahead, it’s crucial that all parties involved – our customers, shareholders, lenders, and national stakeholders – contribute to a sustainable long-term solution. This is fundamentally about ensuring European prosperity and competitiveness.”
