Northvolt, a key player in Europe’s efforts to build an automotive battery industry that can compete with global rivals, has announced plans to cut 1,600 jobs at its base in Sweden, amid sluggish demand for electric vehicles (EV) and stiff competition from Chinese producers.
The cuts, amounting to roughly 20 percent of Northvolt’s global workforce, were announced in a Sept. 23 press release, which cited a “challenging macroeconomic climate” that was forcing Europe’s biggest hope in the EV battery industry to adjust its ambitions and narrow the scope of its operations.
“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,“ Northvolt CEO Peter Carlsson said in a statement. ”We now need to focus all energy and investments into our core business.”
The company said that it is “adjusting its near-term ambitions” to focus on the ramp-up of the first 16 gigawatt-hours (GWh) of annual battery cell production at Northvolt Ett, a battery factory in Skelleftea, northern Sweden, while suspending plans for a large expansion of the facility. The company previously said it aimed to increase its capacity at the Northvolt Ett plant by another 30 GWh, but Monday’s announcement indicates this expansion is being shelved.
Around 1,000 jobs will be cut at the Skelleftea location, the release stated. Another 400 positions will be eliminated at Northvolt Labs, the company’s research and development hub in Vasteras, with another 200 reductions among corporate support staff at the company’s headquarters in Stockholm.
Northvolt’s announcement made no mention of the fate of planned gigafactories in Germany and Canada, which are at risk of being postponed.
The workforce reduction comes after Northvolt announced earlier this month that, in a bid to cut costs, it would slim down its business, departing from its original mission to be an all-in-one shop offering everything from material production and battery making to end-of-life recycling.
Northvolt has spearheaded a surge of European startups investing billions in battery manufacturing to support the continent’s automakers as they transition from internal combustion engines to EVs.
The Sweden-based company is the leading battery manufacturer in the European Union (EU), competing with Chinese giants CATL and BYD, as well as established producers like Panasonic and Samsung, to supply batteries to European automakers.The company has faced challenges with order delays, however. Difficulties in ramping up production prompted BMW to cancel a $2 billion order in June.
Currently, Northvolt produces less than 1 GWh. Originally, it planned to expand the Northvolt Ett factory to 60 GWh capacity, so enough batteries for over one million cars per year.
Northvolt decided to scale back its operations amid a slowdown in EV demand in Europe, and elsewhere.
A June report from consulting firm Ernst & Young (EY) stated that Europe was slowing EV adoption due to high prices, economic uncertainty, and inadequate EV infrastructure.
“The current global EV marketplace is mired with a lot of uncertainty around economic prospects, varying regulations across markets, consumer anxiety and lagging infrastructure build-up,“ Martin Cardell, EY global mobility solutions leader, said in a statement. ”The result has been a plateau in EV sales in the U.S. and Europe.”
However, Cardell said he believes the current headwinds for EVs in both Europe and the United States will be short-lived, predicting that EVs will eventually “regain momentum” and come to dominate the automotive market.
