Northvolt reconsiders expansion plans

The new development is not a report based on insider information, but on statements from the company itself. Initially, Northvolt co-founder and CEO Peter Carlsson said in an interview with the Swedish business newspaper Dagens Industri: “We were a little too aggressive with our expansion plan, and we are now reviewing this.” A Northvolt spokesperson later confirmed to several media outlets: “Northvolt is currently evaluating the timing of the further ramp-up of production at its factories. The focus is on supplying customers from the first Northvolt Gigafactory site in Skellefteå.”

The review announced by Carlsson has a serious background: Northvolt has been producing battery cells in Skellefteå since the end of 2022. But even after a year and a half, the production waste is too high, which not only causes enormous costs but also keeps the production volume of cells ready for delivery far below plan. This has already resulted in Northvolt shareholder BMW recently cancelling an order worth billions: BMW would need the prismatic cells from Skellefteå for the current model series such as the iX, i4 or i5 – but Northvolt is unable to deliver the agreed quantities. As the Munich-based company is switching to round cells for the upcoming New Class electric cars, later delivery is also not an option. In addition to BMW, other customers and shareholders, primarily from the VW Group, have also opted for Northvolt. Scania purchases special lorry battery cells, while Porsche is expected to rely on Northvolt cells for the upcoming all-electric generation of the 718 Boxster/Cayman.

It is not yet clear what consequences the review will have for the factories planned beyond Skellefteå – the review has only just begun. However, the company has already confirmed to Canadian media that it intends to maintain the factory under construction in Saint-Basile-le-Grand. “Our commitment and intentions are unchanged: to play a central role in Quebec’s energy transition by manufacturing the greenest batteries in the world,” a spokesperson stated. However, it is too early to talk about the impact on the factory. In other words, there could be changes to the orientation, production volume or schedule. However, the factory will be built.

Northvolt is committed to expansion in Germany

A spokesperson for Northvolt Germany also tried to dispel fundamental doubts about the factory in Heide, Schleswig-Holstein, which is also under construction: the company is committed to the expansion in Germany. The timetable for the production ramp-up is apparently being reviewed. Federal Chancellor Olaf Scholz also attended the ground-breaking ceremony in March. Originally, the first cells were to be produced in Heide from 2026. However, in the wake of the cancelled BMW order for prismatic cells from Skellefteå, it became known that negotiations were underway to supply BMW with cylindrical cells from Heide in the future. A large order from a well-known customer and shareholder is therefore on the cards, which could influence the economic revaluation of the factory.

No statement has yet been made about the factory in Gothenburg, which is to be built in co-operation with Volvo. However, as a major customer is also on hand here, it seems rather unlikely that Northvolt will cancel the factory completely.

Northvolt can not only continue to expand, but must also watch its money. In 2023, Northvolt tripled its losses – to around 1.2 billion dollars or 1.1 billion euros. Northvolt must continue to invest in order to get the production problems in Sweden under control and build the new factories. At the same time, the company, which wants to set itself apart from the competition with particularly clean batteries “Made in Europe”, is exposed to competition from increasingly cheaper (and available) cells from Asia. In the media, a connection is also being made with the current registration figures for electric cars. However, Northvolt is probably taking a more long-term view here and, in fact, electric car registrations in Europe have only fallen in Germany and Italy – in other countries, electromobility continues to grow.

Carlsson told Dagens Industri that the company needs to focus more on its core business. “We see the need to adjust our plans to ensure that we execute each phase well,” the Northvolt boss is quoted as saying. The company is aiming for a market share of 25 per cent in Europe by the end of the decade.

In this important phase, there is also a change in top management: Chairman Jim Hagemann Snabe has stepped down from his position for health reasons and will be replaced on an interim basis by Tom Johnstone as Chairman and member of the Board of Directors. Snabe had already stepped down from his role at Northvolt (and Siemens) at the beginning of 2024 in order to focus on his recovery. The manager has now permanently relinquished his position at Northvolt.

bmmagazine.co.uk, thetimes.com, di.se (expansion planning), cbc.ca (Canada), handelsblatt.com (business numbers 2023, in German), northvolt.com (Board of Directors)