Northvolt cuts 1,600 jobs, puts cell plant expansion on ice
The pressure to cut costs is increasing. A fortnight ago, Northvolt announced that it wanted to cut staff and deprioritise factories for the production of cathode material in Sweden and for the construction of battery storage systems in Poland. Both of these are side businesses. The core business—i.e., the production of battery cells—was initially considered to be unaffected by this course. However, it is now clear that the “tough actions” made by Northvolt’s management also impact the latter.
According to a new company announcement, around 1,600 jobs will be cut in Sweden—1,000 in Skellefteå, 400 in Västerås, and 200 in Stockholm. The former municipality is home to Northvolt’s upcoming large-scale production and a cathode material factory that is currently on hold. The company’s research and development are bundled in Västerås, while the administration is based in Stockholm. To emerge from the current crisis, Northvolt says that 25 per cent of the workforce in Sweden and 20 per cent globally will have to be cut. All redundancies are subject to ongoing trade union negotiations.
As a result, the company is scaling back its ambitions. While there was previously talk of scaling up quickly at the Northvolt Ett cell factory in Skellefteå, Northvolt now wants to limit itself to realising the initial 16 GWh “to prioritise commitments to its current automotive customers.” The company is putting the planned expansion to 30 GWh on hold. The expansion and programmes of the R&D centre called Northvolt Labs in Västerås “will be slowed.” At the same time, the administration in Stockholm is also being downsized.
Peter Carlsson, CEO and co-founder of Northvolt, comments: “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.”
Carlsson describes the successful ramp-up of production at Northvolt Ett as crucial. The focus on this core activity, which has been ongoing for several months, is said to have already tripled local cell production since the beginning of the year. “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,” Carlsson emphasises.
Northvolt had already announced a review of its expansion plans at the beginning of July. The reason: It has been producing battery cells in Skellefteå since the end of 2022. However, even after a year and a half, the production waste has recently been too high, which not only causes enormous costs but also keeps the production volume of cells ready for delivery far below plan. It even resulted in Northvolt shareholder BMW cancelling an order worth billions in the summer. And, of course, the declining demand for EVs is also affecting Northvolt indirectly.
At the beginning of the month, the Swedish battery cell manufacturer made its first major course corrections in its current business to consolidate. For example, it paused production at a new cathode material plant in Skelleftea until further notice (which is likely to contribute to the high number of job losses in Skelleftea) and cancelled the construction of a second cathode factory in Borlänge, Sweden, altogether. The site will be sold. Northvolt is also looking for an investor for its battery storage systems factory in Gdansk, Poland.
There is still no word on Northvolt’s planned cell factories in Germany and Canada. However, the expansion of the factories in both countries could take place later than planned, according to a recent report in the German Handelsblatt. According to the Quebec provincial government, the construction of the Canadian battery cell factory could take up to 18 months longer.
With regard to the Northvolt project in Heide/Schleswig-Holstein, speculation ranges from a postponement of the planned plant construction to a general withdrawal. Following the loss of the BMW order, Northvolt CEO Peter Carlsson admitted that the company had been too aggressive in its international expansion – and that the plans for further plants were, therefore, being reassessed. According to Northvolt, a further update on the strategy is planned for the autumn. There should then also be official news about Heide. The ground-breaking ceremony took place in March 2024. Commissioning is currently scheduled for 2028.
Meanwhile, Northvolt is not the first battery cell manufacturer to adjust its plans. In June, the Automotive Cells Company (ACC) joint venture between Stellantis, Mercedes-Benz and TotalEnergies announced that it was pausing construction work on its battery cell plants in Kaiserslautern and Termoli, Italy, to switch to a different cell chemistry. Also, in early summer, the Chinese battery specialist SVOLT announced that it would not be realising its plant in Lauchhammer, Brandenburg, which was announced in September 2022. The construction of the SVOLT factory in Germany also continues to be delayed.
Another example is Ford: plans for a Turkish battery cell plant under the direction of LG Energy Solution and Koç – a shareholder in the Ford Otosan joint venture alongside Ford – have been on hold for some time. That comes as Ford announced a cost-cutting programme in response to billions in losses at Ford’s Model e electric division and weakening demand.
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