Northvolt to cut 1,600 jobs over EV cooldown

Swedish battery manufacturer Northvolt, Europe’s unicorn start-up in the electric vehicle (EV) battery market, announced it will cut 1,600 jobs. The number accounts for roughly 20% of its global workforce.

The decision comes as the company faces significant financial challenges and a slowdown in the EV market. The cuts will disproportionately affect Sweden, with around 1,000 jobs being eliminated at its flagship factory in Skellefteå, and another 400 positions at its research facility in Västerås.

Northvolt has also suspended its planned expansion of the Northvolt Ett plant in Skellefteå, which was set to increase its battery production capacity by 30 gigawatt-hours (GWh) annually.

Instead, the company will focus on ramping production to the initial 16 GWh capacity. Currently, the factory produces less than 1 GWh annually, far short of its goal of producing batteries for over a million cars per year.

The decision to downsize and delay expansion is a stark departure from Northvolt’s ambitious plans to become a major European competitor to Asian battery giants, such as China’s CATL and BYD.

The company, co-founded by former Tesla executive Peter Carlsson in 2016, has been a key player in Europe’s strategy to develop a homegrown battery industry, reducing reliance on imports from Asia. Northvolt’s current crisis is a further worry for struggling Volkswagen, its majority shareholder.

Sluggish demand for EVs

Various issues, including sluggish demand for EVs, production challenges, and intense competition from Chinese manufacturers, have exacerbated the financial difficulties.

The company reported a loss of €1.0 billion in 2023, a significant increase from its €256 million loss the previous year. Despite securing over $45 billion in contracts from significant automakers such as Volkswagen and Volvo, Northvolt has struggled to meet its production targets, leading to order cancellations. BMW, for instance, pulled a €1.8 billion order earlier this year due to delays in battery delivery and turned to South Korean supplier LG Chem.

According to reports, Northvolt is attempting to raise 7.5 billion SEK (approximately €593 million) through a new equity issuance to stabilize its financial position. Peter Carlsson, Northvolt’s CEO, emphasized the need for collaboration among all stakeholders, including shareholders, lenders, and national governments, to navigate the current challenges.

“It’s crucial that everyone involved works together to find a sustainable solution. This is about more than just Northvolt; it’s about the future of Europe’s competitiveness in the global battery market,” he said in a statement.

The Swedish government, however, has made it clear that it will not step in to support Northvolt financially. Prime Minister Ulf Kristersson stated that while the government wishes for the success of companies in green technologies, it does not plan to become a shareholder in Northvolt or provide financial aid.

Betting on sodium-ion

Looking ahead, Northvolt is seeking partners for its energy storage division in Poland and has halted plans for new gigafactories in Germany and Canada. Northvolt isn’t the only battery manufacturing start-up stepping on the brakes. Two months ago, Automotive Cells Company (ACC) announced that it halted the construction of its plants in Italy and Germany, leaving only one operational in France.

Citing reasons for the change of course, ACC pointed to the shift to lithium-ferro-phosphate (LFP) batteries instead of the nickel-manganese-cadmium (NMC) chemistry that the Western industry has been aiming for beyond the slowdown in EV adoption.

Northvolt, however, is betting on sodium-ion technology as next-generation chemistry, which it states is safer, more cost-effective, and more sustainable than both LFP and NMC.