Swedish battery-maker Northvolt has announced the results of a strategic review into its business.
The initial outcome is a decision to “streamline” its operations by resolving production problems at its Ett gigafactory in northern Sweden. However plans to build gigafactories worth €12.6bn in Germany, Sweden and Canada are still going ahead – eventually.
Its primary plant, in Skellefteå near the Arctic Circle, has an annual capacity of 16GWh but is producing fewer than 1GWh at present.
Plans to build “Northvolt Fem”, a cathode materials factory in the town of Borlänge, have been terminated and the site has been sold. The company will instead buy them from Chinese and Korean suppliers.
The company will look for partners and investors in “Northvolt Dwa”, a battery assembly plant that was to be built in Gdansk.
There will be a large number of job losses among its 7,000 workers.
Peter Carlsson, chief executive and co-founder, commented in a press statement: “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.”
Northvolt has raised €15bn in debt and equity – the most of any start-up in Europe. Its backers include Volkswagen, Goldman Sachs, BMW, Siemens and BlackRock.
It has suffered from a saturation of the EV battery market due to increasing supply and decreasing demand, particularly from European carmakers. Volkswagen recently warned it could close factories in Germany, and Volvo has abandoned its 2030 goal of selling only EVs.
BMW recently cancelled a $2bn contract with Northvolt, instead giving it to Korea’s Samsung SDI. To make matters worse, Korean and Chinese groups are building a number of battery factories in Europe, mainly in Hungary.
As previously reported (see further reading), Northvolt will delay plans to build three more gigafactories: Novo, near Gothenburg, Northvolt Six near Montreal and Northvolt Drei near Berlin. Together, these plants have an investment value of €12.6bn.
It said the timelines of the projects would be confirmed in the autumn, adding that it “remained committed” to them.
“As difficult as this will be, focusing on what is our core business paves the way for us to build a strong long-term foundation for growth that contributes to Western ambitions to establish a homegrown battery industry,” Carlsson said.
Northvolt, which launched its strategic review in July, is also debating what to do with what its plans to develop sodium-ion batteries, which use no lithium, cobalt or nickel.
Although Northvolt is seeking buyers or partners for its energy storage business, executives said it could continue to develop sodium-ion technology with other companies eventually making the product.
Despite Northvolt’s present difficulties, Carlsson stressed his confidence that they would be overcome.
He said: “While conditions at this time are challenging, there remains no question that the global transition towards electrification – and the long-term outlook for cell manufacturers, including Northvolt – is strong.”
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