Northvolt slashes workforce in half under bankruptcy procedure 

Under its bankruptcy filing, Swedish battery manufacturer Northvolt announced that it will lay off over half its 5,000 employees. The company, founded in 2016, has succumbed to mounting debt and what insiders now admit were strategic miscalculations.

Once hailed as Europe’s answer to Asian dominance in EV battery production, Northvolt officially filed for bankruptcy on March 12th, following an earlier Chapter 11 filing in the US aimed at debt restructuring.

According to court-appointed administrator Mikael Kubu, just 1,700 employees will remain on the payroll to keep essential operations running as efforts to find a buyer continue. Kubu said continued activity is crucial to preserving any chance of a partial or complete sale.

‘Logistical nightmare’

The bulk of layoffs will hit Northvolt’s Skellefteå gigafactory, a high-profile site in northern Sweden that employed around 3,000 workers. Only 1,200 will stay.

The location, once marketed as a strategic hub due to its access to green energy and logistical links, is now described by insiders as a “logistical nightmare” and a costly gamble in a remote, unattractive region for global talent.

Interim CEO Tom Johnstone described the collapse as “an incredibly difficult day” for the company and its staff. He cited rising capital costs, geopolitical instability, supply chain disruptions, and sudden market shifts as key reasons for the downfall. 

Despite efforts to secure an additional €1.2 billion in funding as recently as last month, Northvolt couldn’t close the gap in its €7.8 billion financial shortfall for 2024 alone.

Johnstone didn’t shy away from blaming Brussels either, accusing the EU of sitting idly by during the crisis. He warned that building a European battery industry capable of reducing reliance on China will require “a huge amount of money and a lot of pain.”

Scania to the rescue?

The company’s aggressive expansion plans now read like a cautionary tale. Instead of scaling gradually, Northvolt raced to launch gigafactories in Germany, Poland, and Canada, along with a recycling facility in Norway and lithium conversion operations in Portugal. Yet by late 2024, its flagship plant in Sweden was operating at just five percent of capacity.

Co-founder Peter Carlsson admitted late last year that the company “may have grown too aggressively.” While Northvolt Germany and Northvolt North America are not currently part of the bankruptcy proceedings, their future is also questioned.

Northvolt Poland has already been sold to an industrial player, while Volvo took complete control of the joint battery plant Novo Energy near Gothenburg.

Sweden’s government has pledged to help find new owners for the remaining Northvolt facilities and research centers. Administrator Kubu remains hopeful that key clients like Scania could help save operations. But for now, Europe’s once-bright battery hope faces a dim future.