Northvolt forced to gear down in its expansion ambitions

Swedish battery maker Northvolt, one of Europe’s pioneers in that field, is forced to gear down in its ambitions to build several gigafactories in Europe and Canada.

Founder and CEO Peter Carlsson told Swedish media, “We’ve been a little too aggressive in our expansion plans and need to reassess the next steps.” That includes postponing the building of Northvolt Drei in Schleswig-Holstein, in northern Germany, and the Canadian factory in Montreal.

Having no other options

Northvolt has little or no other options after news broke two weeks ago that BMW was pulling back from the €2 billion deal it concluded in 2020 with the Swedish battery maker to deliver cells from 2024 as part of a long-term contract. According to German media at that time, Northvolt was said to be two years behind schedule and deliver ‘too many rejects’.

“In the current situation, we are looking to focus more on the core of our business. To move forward in Germany and Montreal, it is fundamental that Skellefteå is the mother plant on which the plan is based,” Carlsson said in an interview with the business daily Dagens Industri.

The factory in Skellefteå is still partially under construction and will attain its peak production in 2026, later than initially foreseen.

In December 2021, Northolt commissioned its first Skellefteå factory by producing the first prismatic battery cell on site. Production started fully in 2022 and should have ramped up to a capacity of 16 GWh annually. That’s enough to power about 300,000 electric cars. Ultimately, the factory will output 60 GWh per year. But apparently, the Swedes won’t manage that before 2026.

Northvolt Drei

At the end of March 2024, the first stone was laid for Nortvolt Drei, the Swedish cell maker’s German gigafactory in Heide, a city of more than 22,000 inhabitants in Schleswig-Holstein, in northern Germany. Volkswagen had a deal with Swedes to build ‘Northvolt Zwei’ in Lower Saxony, Germany, so this plant was called ‘Northvolt Drei’.

Northvolt Drei is positioned to produce the cleanest batteries for EVs in continental Europe, with a capacity of up to 60 kWh. It would initially start producing in 2025 at the earliest, later projected to be most likely 2026. It should run at total capacity by 2029, representing annual battery production for 800,000 to 1 million EVs. But that could be beyond 2030 now.

$5 billion for Canadian factory

Northvolt is also planning a factory in Canada. It chose a site on the coast of Montreal to construct its first North American Gigafactory. In September 2023, the company said it would invest five billion euros in the region.

Northvolt Six will be a cell factory for lithium-ion technology, targeting 60 GWh of annual capacity “to meet the growing demands of the North American BEV market.” In the first phase, set to be completed in 2026, only half of that capacity will be made available, with a ramp-up later. But in 2024, that ‘growing demand’ slowed significantly, especially in the US.


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