Northvolt to Lay Off 1,600 Employees Amid Cost-Cutting Measures

Battery manufacturer Northvolt has announced plans to reduce its workforce by 1,600 jobs, which constitutes approximately 20% of its total global staff. This decision comes as the company faces significant challenges in the electric vehicle (EV) battery sector, including production hurdles, declining demand, and mounting competition from Chinese manufacturers.

On Monday, Northvolt, a key player in establishing a European battery production industry, disclosed that it would halt plans for an extensive expansion of its Northvolt Ett facility located in Skelleftea, Sweden. Earlier this month, Northvolt adjusted its business strategy, moving away from its initial vision of being an integrated supplier that manages everything from raw material processing to battery manufacturing and recycling.

With support from significant investors like Volkswagen, Northvolt has been at the forefront of a surge of European startups committing substantial funds to battery production to support regional automakers transitioning from traditional combustion engines to electric vehicles.

The Swedish firm has encountered difficulties with order fulfillment, highlighted by BMW’s decision to cancel a $2 billion order in June due to production scaling issues.

Northvolt aims to concentrate on increasing the annual production capacity of battery cells at Northvolt Ett to 16 gigawatt-hours (GWh), while pausing a project intended to add an additional capacity of 30GWh.

Presently, Northvolt produces less than 1GWh of batteries and had ambitious plans for the facility to ultimately produce batteries sufficient for over a million vehicles annually, with a targeted capacity of 60GWh.

The growth rate of EV demand has been slower than anticipated in the industry, coupled with fierce competition from China, which reportedly dominates 85% of global battery cell production, according to the International Energy Agency.

Peter Carlsson, co-founder and CEO of Northvolt, expressed the company’s resolve to navigate its current challenges and emerge more efficient. He stated, “We now need to focus all energy and investments into our core business.”

The company has opted to slow all research and development initiatives at its Northvolt Labs, concentrating on maintaining essential platforms. It has not provided details about the potential delays of planned gigafactories in Germany and Canada.

Despite securing more than $50 billion in orders from various clients, including Volkswagen, Northvolt continues to operate at a loss, reflecting the difficulties European manufacturers face in competing with their Chinese counterparts. Last year, Northvolt reported a loss of $1.2 billion, a substantial increase from a $285 million loss the previous year, with $2.13 billion in cash reserves reported at the close of 2023.

Evan Hartley, an analyst at Benchmark Mineral Intelligence, commented on Northvolt’s approach, noting, “Their level of ambition and realism is fairly balanced, as they are not pushing blindly ahead when it’s not working.”