Updated 4 Sept 2024
The Nordic dreams of gigafactory production have taken another hit, with Freyr Battery announcing a pause to cell production and the loss of jobs.
Management met with employees on 29 August to break the news that there would be “considerable reductions” in workforce and the battery cell production at the Mo i Rana plant in northern Norway put on hold. CEO Tom Einar Jensen told national broadcaster NRK the reason was the tough competition from China.
“There’s a considerable overcapacity of battery cells from China that makes prices fall so much that we have to go back to the drawing board,” he said. It will mean a reduction not just at Mo, but throughout the business.
Last November, the company decided to halt the construction of a gigafactory in Norway and instead focus on the US, where tax breaks under the Inflation Reduction Act were more favourable. It is planning a Giga America plant, with production due to start in 2026.
Instead of manufacturing cells in Norway, the company will now use the excess battery cells as a module and battery pack assembly business. It was planning to commence production of sample functional battery cells using the full automation of the Customer Qualification Plant (CQP) in Norway in the first half of 2024.
CEO Tom Einar Jensen said: “Freyr works with alternative business models, and at Mo the areas of research and development using the existing CQP production line, development of digital battery solutions and module packaging will be the focus.”
In its second quarter earnings report released on 9 August, Freyr said it was focusing on “less capital intensive opportunities tied to downstream modules and packs which offer the fastest and most readily financeable paths to first revenues and cash flows.”
Jensen said the investment was not wasted and the company would work to develop the Norwegian battery industry, but “working on a different part of the value chain” than originally foreseen.
The Giga Arctic plant investment set it back roughly $2.5 billion of investment in 86,000 sq m. The CQP cost an additional $1.5 billion, the company said. It spans 13,000 sq m of industrial scale cell production line, test centre, laboratory and floor space for further development.
In neighbouring Sweden, Northvolt is not commenting (we did ask) on fears from the provincial government in Quebec, Canada, that a strategic review could mean an 18-month delay to building a gigafactory there.
Economy minister Pierre Fitzgibbon said on X the battery slowdown was worldwide, with experts expecting a 12–18 month lag.
Production at the plant was due to begin in 2026. Northvolt Six is supposed to be Canada’s first fully integrated battery manufacturing plant, making lithium-ion cells for electric cars, trucks and buses. The first batteries were expected out of the production lines in 2026.
