Northvolt announced 1,600 job losses on Monday, triggering crisis talks. The Swedish government has reportedly established a management group comprising senior civil servants to handle the crisis at Sweden’s biggest EV battery maker.
They include officials from the finance, industry and labour market ministries. Industry minister Ebba Busch is reportedly in correspondence with the European Commission and German government, emphasising the importance of ensuring European battery production.
Northvolt said in its statement that in addition to the redundancies, comprising some 20% of the global workforce and a quarter of the Swedish workforce, it would:
- suspend work on expansion projects in Skellefteå, the site of its Northvolt Ett gigafactory
- focus purely on a path to manufacturing 100,000 cells per week
- downsize Northvolt Labs and corporate functions.
Iola Hughes, head of research at Rho Motion, told BEST Northvolt’s re-evaluation of operations is reflective of the difficulties facing many domestic European cell manufacturers. “The move to re-focus efforts on cell manufacturing is a logical one for the company given developments over the last six months (BMW withdrawal, struggles in ramping etc). Ultimately this is a warning for others looking to bring cell manufacturing to any region from scratch and exposes the fragility of the market’s reliance on China for expertise as well.”
The company said it would prioritise current commitments and said it had recently brought in an acceleration programme geared to increasing levels of production. The Northvolt Ett cell production has increased three-fold since the beginning of this year, it said.
Peter Carlsson, CEO and co-founder of Northvolt, told Swedish media DItv the company was “working actively” on a financing process. It is in dialogue with current investors, lenders, clients and others to seek a solution, he said.
He noted that the Swedish state is not willing to bail the company out, but added: “This is very important strategically for Europe and the Swedish auto industry.” The green transition requires his company to be a success, he said.
Asked if bankruptcy was on the cards, Carlsson admitted all scenarios had been considered. By focusing on core activities in cell production, he sees profitability by 2026. He admitted to asking himself if he was the right person to lead Northvolt, but as long as he had the confidence of the board and shareholders, he would continue to give his all.
The company said on Monday: “While overall momentum for electrification remains strong, we need to make sure that we take the right actions at the right time in response to headwinds in the automotive market, and wider industrial climate.
“We now need to focus all energy and investments into our core business… Recent production records at Northvolt Ett show that we are on the right path, but the decisions we’re taking today, however tough, are required for Northvolt’s future.”
Northvolt Ett will not be expanded with the extra 30GWh of cell manufacturing capacity as planned. Earlier this month, the company mothballed its cathode active material facility.
