Battery maker Northvolt to axe 1,600 jobs in effort to cut costs

Northvolt plans to cut 1,600 jobs, or about a fifth of its global workforce, as Europe’s biggest hope in the electric vehicle battery market struggles with production problems, sluggish demand and competition from China.
On Monday, the leader in efforts to build a European automotive battery industry said it would suspend plans for a large expansion of its Northvolt Ett factory in Skelleftea, northern Sweden.Northvolt slimmed down its business earlier this month, departing from its original mission to be an all-in-one shop offering everything from material production and battery making to end-of-life recycling.
With Volkswagen among its owners, Northvolt has led a wave of European startups investing billions of dollars in battery production to serve the continent’s automakers as they switch from internal combustion engines to EVs.
But the Swedish company has struggled with order delays. Problems scaling up production led BMW to pull a $2 billion order in June.
Northvolt said it would focus on ramping up the first 16 gigawatt-hours (GWh) of annual battery cell production capacity at Northvolt Ett, while shelving a construction project that had aimed at increasing its capacity by another 30GWh.
Currently, the company produces less than 1GWh and originally planned for the factory to ultimately make batteries for over one million cars a year, at 60GWh of capacity.
Growth in EV demand is also slower than some in the industry projected, and competition is stiff from China, which accounts for 85 per cent of global battery cell production, International Energy Agency data shows.
“We are determined to overcome the challenges we face, and to emerge stronger and leaner,” Northvolt co-founder and chief executive Peter Carlsson said. “We now need to focus all energy and investments into our core business.”
The company’s R&D hub, Northvolt labs, will slow all programmes and expansion, while maintaining the fundamental platforms, it said. It did not mention the fate of planned gigafactories in Germany and Canada, which are at risk of being postponed.
Northvolt is still loss-making despite securing orders worth over $50 billion from customers including top investor Volkswagen, underscoring Europe’s struggle to compete with the dominance of Chinese battery makers.
It lost $1.2 billion last year, an increase from a $285 million loss the year before. Its cash on hand at the end of 2023 was $2.13 billion.
Northvolt’s “level of ambition and their level of realism at the moment is fairly good in that they’re not pushing blindly ahead when it’s not working,” said Evan Hartley, an analyst at Benchmark Mineral Intelligence.