Northvolt slashes jobs amid slump in EV sales

Europe's biggest battery maker pauses operations at its Northvolt Ett Upstream 1 cathode material factory

Northvolt has launched a strategic review during which it will seek partners for factories in Poland. Photo: Northvolt AB

Swedish battery maker Northvolt is pausing some production and slashing jobs as it battles with operational difficulties and a slump in electric vehicle sales.

The company has launched a strategic review during which it will seek partners for factories in Poland.

It has already sold a Swedish site it had previously planned to use to make cathode material, a precursor to manufacturing batteries.

“We are having to take some tough actions for the purpose of securing the foundations of Northvolt’s operations to improve our financial stability and strengthen our operational performance,” chief executive Peter Carlsson said.

The company is pausing operations at its Northvolt Ett Upstream 1 cathode material factory until further notice.

Northvolt, Europe’s biggest battery manufacturer, has struggled to increase production at its main factory outside the town of Skelleftea near the Arctic Circle. It has already delayed a planned initial public offering to next year because of a challenging market and the operational problems.

The market for battery makers continues to worsen amid falling EV sales, with companies including Volkswagen, Stellantis and Mercedes-Benz Group all scaling back or refocusing battery projects this year.

Northvolt said it remains committed to its factories, NOVO in Sweden, Northvolt Drei in Germany and Northvolt Six in Canada, and is in close dialogue with key stakeholders.

Northvolt electric battery plant in Sweden – in pictures

Potential revisions to those projects’ timelines will be confirmed in the autumn, along with any further cost saving actions.

Northvolt’s main site delivered its first batteries in May 2022, but scaling up production has been far from smooth.

BMW backed out of a €2 billion ($2.2 billion) order in June, while Volkswagen’s Scania complained of slow deliveries earlier this year.

There has also been a sharp decline in electric vehicle sales in Europe as there are not enough affordable models to move past early adopters and the wealthy, and reduced government incentives have further sapped customer interest.

The EVs that are sold are increasingly Chinese or American, with BYD and Tesla selling more than local manufacturers combined.

Northvolt, founded by two former Tesla managers about eight years ago, counted Volkswagen as its biggest individual owner at the end of last year, with a 21 per cent stake, while funds managed by Goldman Sachs Asset Management had about 19 per cent.

Vargas Holding AB of Harald Mix had about 7 per cent and Northvolt managers and staff a combined about 9 per cent, according to its annual report for last year.

On Monday, a report by former European Central Bank president Mario Draghi on EU competitiveness criticised the automotive sector in particular.

The EU faces a real risk that its carmakers might continue to lose market share to China, which is ahead of the bloc in “virtually all domains” while producing at a lower cost, the report read. It referred to the industry as a “key example of a lack of EU planning”.

In June, police launched an investigation into the deaths of three workers at Northvolt's “gigafactory” in the northern town of Skelleftea.

A 33-year-old man, who worked as a cleaner at the factory, was found dead at his home on January 5. On February 22, a 19-year-old man was found to have died in his sleep a day after working a shift at the factory. A third employee, aged 59, was found dead at his home on June 5.