Northvolt scales back plans amid economic challenges
Northvolt scales back plans amid economic challenges
Northvolt, a leading Swedish battery manufacturer, announced plans to scale back its workforce and exit a battery materials production site amid challenges in ramping up its ambitious gigafactory plans. The move comes as part of the initial outcomes from Northvolt's strategic review, launched in July, as the company grapples with a "challenging macroeconomic environment." Founded in 2016, Northvolt aimed to develop the "world's greenest battery," with a focus on minimizing carbon footprints, sustainable raw material sourcing, and recycling. Over the years, the Stockholm-based company raised over $14 billion, including a $5 billion green loan earlier this year, intended to expand its lithium-ion battery gigafactory and recycling facility in Northern Sweden. However, the company is now facing significant headwinds in executing its plans.
The announcement to scale back operations comes as European carmakers, like Volvo Car, adjust their electrification strategies. Last week, Volvo revised its target of offering only fully electric vehicles by 2030, replacing it with a new goal of having 90% to 100% of its global sales volume consist of "electrified cars," including fully electric and plug-in hybrids. Volvo cited slower-than-expected charging infrastructure rollout, withdrawal of government incentives, and uncertainties caused by recent EV tariffs as reasons for the shift. In 2021, Volvo and Northvolt announced a joint venture to establish a new gigafactory in Europe with a potential capacity of up to 50 gigawatt hours (GWh) per year, scheduled to start production in 2026. Northvolt has faced its own challenges in scaling up production. Recently, BMW canceled a €2 billion contract with Northvolt, reportedly due to concerns that the company would not be able to deliver on time. BMW has since turned to Samsung SDI for its EV battery needs. Earlier this year, Northvolt's chairman, Jim Hagemann Snabe, stepped down due to health issues and subsequently resigned from the board. In response to these challenges, Northvolt announced several key actions, including placing its cathode active material production facility at Northvolt Ett, its first gigafactory in Skellefteå, Sweden, into care and maintenance to streamline costs and optimize production ramp-up. The company also plans to exit its facility for cathode active material production in Borlänge, Sweden, and has signed an agreement to sell the site. Additionally, Northvolt will integrate its subsidiary Cuberg and lithium metal technology in California into Northvolt Labs in Sweden and is in discussions with potential partners for its battery module and pack assembly facility in Poland. Northvolt CEO Peter Carlson said that while conditions are challenging, the long-term outlook for power and cell manufacturers remains strong. The company is focused on strengthening operations to improve financial stability and operational performance, although it is expected that staff will be reduced as part of the restructuring.