Novo Energy to Cut Half of Workforce Amid Northvolt Collapse

Volvo Cars' battery joint venture, Novo Energy, has announced it will reduce its workforce by 50% as part of a cost-saving initiative following its former partner, Northvolt, going into bankruptcy. The move will involve an additional 150 job losses, in addition to a 30% January cut. The Sweden-based firm, formed in 2021 by Volvo and Northvolt, was originally established to build a freestanding battery factory at Gothenburg. However, chronic economic challenges and the loss of a key technology partner have affected its operations.

The battery project has stalled after Northvolt's bankruptcy in March 2025, which was previously regarded as one of the most visible players in Europe's green energy sector. As a result, Novo Energy has been actively searching for a new technology partner to make its long-term production plans feasible. Despite these losses, Novo indicated that it would continue to have small-scale operations as it completes the first half of the Gothenburg plant construction. The company is determined to one day resume full-scale production with a new partner.

Volvo Cars, which owns a 50% stake in Novo, has offered to acquire the remaining 50% from Northvolt. The transaction has not yet been concluded. If approved, it would grant Volvo full ownership of the battery company. The strategic acquisition comes as Volvo is also facing internal cash constraints. The company previously stated that it does not anticipate large new investments in the near term. Its new CEO, Hakan Samuelsson, confirmed that while the factory building is nearly complete, no battery production equipment has been installed. He also stressed the need for a new tech partner and said that the factory can be used by other brands owned by Volvo's parent firm Geely. 

The basic aim of Novo Energy to produce batteries in Gothenburg remains the same, though its execution hinges on the availability of the required technological and financial support. The recent layoff testifies to the broader pressures in the EV battery manufacturing sector, which has been faced by fluctuating market demands and instability in dominant players. However, Volvo has signalled its intent to continue developing its EV infrastructure, albeit in a prudent fashion and likely in cooperation with other Geely-owned entities.

While the current setback delays short-term production goals, both Novo and Volvo are seeking to transform their strategies in accordance with shifting market conditions. The long-term plan is to utilize the Gothenburg plant as a central facility for manufacturing batteries, with the potential to supply several motor vehicle brands. Completion of the initial phase of the site and continued search for partnerships suggest that the project, while delayed, has not been abandoned.

Conclusion:
Novo Energy layoffs and production slowdowns are consequences of Northvolt's collapse and broader economic pressure within the EV battery sector. With Volvo Cars set to take the company full-own, focus is now on securing new partnerships and moving toward the Gothenburg factory. While timing on battery production has been rescheduled, the strategic plan remains to focus on building a scalable foundation of manufacture, depending on market turnaround and technology integration.

Source/Credits:
Reuters – Reporting by Louise Breusch Rasmussen and Marie Mannes; Editing by Terje Solsvik, Sharon Singleton, and Barbara Lewis.