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Northvolt, a major European battery maker, is set to cut more than one in five jobs and halt the expansion of its main gigafactory as it fights for survival.
The group said on Monday it would cut 1,600 jobs in Sweden as part of efforts to attract new capital from investors.
The loss-making company says it has been able to triple its battery cell production to 60,000 units per week since the beginning of this year, but that’s still far short of the 1 gigawatt-hour of batteries needed per year to power about 17,000 cars.
Its factory in Skellefteå in northern Sweden has a production capacity of 16GWh, but Northvolt has struggled to ramp up production since making its first cells in late 2022.
“The overall momentum towards electrification remains strong, but we need to take the right actions at the right time in response to headwinds in the auto market and the broader industrial environment,” said CEO Peter Carlsson.
He added that the group now needed to “focus all its energies and investments on its core business”.
Northvolt is Europe’s big hope in competing with Asian powerhouses in the battery industry, such as China’s CATL and BYD, and South Korea’s LG and Samsung.
But despite raising $15 billion since it was founded from the likes of Volkswagen, Goldman Sachs, BMW and Siemens – the largest amount for a private European start-up – the Swedish group needs more capital to continue expanding production at Skellefteå.
The company has struggled in recent months to convince investors to join it in further fundraising amid concerns that the uptake of electric cars in continental Europe will slow. Sweden’s center-right government last week ruled out a government bailout for the company.
Northvolt announced on Tuesday it was abandoning plans to add another 30 GWh of capacity at Skellefteå. Carlsson told the Financial Times this summer that he wanted to produce “just a handful” of GWh of batteries in 2025 and be profitable the following year.
The cuts will affect 1,000 employees in Skellefteå, 200 kilometres below the Arctic Circle, 400 at its research facility in Västerås in central Sweden and 200 at its headquarters in the capital Stockholm.
The company employs 7,100 people worldwide, of which 6,400 are in Sweden.
“Northvolt’s successful ramp-up of production [Skellefteå] “This is critical to our ability to serve our customers and operate a sustainable business,” Carlson said, adding that the plant’s recent production data shows the company is moving in the right direction, but “the decisions we make today, no matter how tough, are necessary for Northvolt’s future.”
BMW, Northvolt’s first customer and a top 10 shareholder, was frustrated by the slow increase in production capacity and canceled a $2 billion contract with the battery maker earlier this year, handing it over to Samsung instead.
Northvolt has sought to highlight its importance to European industry, particularly the automotive sector, arguing that the continent cannot allow Asian rivals to monopolise leadership of a key component of car manufacturing.
The company has suggested that its focus on Skellefteå for the time being may delay plans to build three future factories – one in Sweden with Volvo Cars, and one each in Germany and Canada.
