September 27, 2024: Swedish battery maker, Northvolt, is to cut 1,600 jobs, or one-fifth of its workforce, as it fights to survive amid production problems, sluggish demand and competition from China.
The announcement to downsize from the contender to become Europe’s top lithium battery manufacturer came on September 23, after weeks of uncertainty over reports of financial problems within the group as the EV industry struggles. Cost-cutting measures, including a halt on expenses, were announced two weeks ago and the company is also looking for new investment.
Under what it says is a “revised scope of operations in Sweden,” the redundancies will be spread across three of its sites including 1,000 in Skellefteå, in northern Sweden, where it is suspending the expansion of Northvolt Ett, Europe’s first homegrown battery gigafactory. The company will also cut 400 jobs at its R&D lab in Västerås, in central Sweden, and 200 in Stockholm, home to its head office.
Many in the industry see Northvolt as Europe’s great hope of competing with the dominant Asian players in the battery industry such as China’s CATL and BYD and South Korea’s LG and Samsung.
But while the group has said it will prioritize ramping up to 16GWh of annual production capacity at its Skellefteå facility, it is shelving a planned expansion that would have added 30GWh. Current production at the site remains under 1GWh — far short of the 60GWh capacity the factory was originally expected to achieve, enough to supply batteries for over one million EVs annually.
Peter Carlsson, the company’s chief executive and co-founder, insisted that “overall momentum for electrification remains strong” but that “tough” decisions were needed to ensure the company’s future.
“We are determined to overcome the challenges we face, and to emerge stronger and leaner,” he said earlier this week in a press release. “We now need to focus all energy and investments into our core business.”
The layoffs mark a blow to Europe’s industrial strategy as it looks to maintain its position as an automotive leader. The EU has raced to sign agreements with third-party countries to secure critical raw materials required for EV batteries but consumer demand for greener vehicles is struggling to increase quickly enough.
Earlier this month, industry data showed that EV car sales were at a 3-year low in August, plunging 44%.
Northvolt’s cuts are the latest in a wave of job losses sweeping the industry, including 14,000 announced by Tesla earlier this year and thousands linked to potential factory closures by Volkswagen in Germany.
Volkswagen, one of Northvolt’s key investors, had positioned Northvolt at the forefront of Europe’s drive to build its own battery manufacturing base. Yet, the Swedish battery maker has struggled to meet deadlines, a situation exacerbated by production scale-up difficulties. Notably, BMW cancelled a $2 billion order in June, a significant setback for the firm.
“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,” Carlsson said. “We now need to focus all energy and investments into our core business.”
All redundancies are “subject to ongoing union negotiations”, the company said.
