Northvolt Sells Battery Materials Site and Cuts Workforce Amid Challenging EV Market

Battery manufacturer Northvolt announced plans today to reduce its workforce and exit a battery materials production site, citing challenges in scaling up its ambitious gigafactory expansion due to a "challenging macroeconomic environment."

These steps are part of the company's strategic review, initiated in July. Founded in 2016 in Stockholm, Sweden, Northvolt aims to create the “world’s greenest battery” by minimizing its carbon footprint, sustainably sourcing raw materials, and focusing on recycling. The company has raised over $14 billion, including a $5 billion green loan earlier this year, to fund its lithium-ion battery gigafactory and recycling facility in Northern Sweden.

The pullback comes as European automakers reassess their electrification goals. For example, last week, Volvo Cars adjusted its target for fully electric vehicles by 2030, now aiming for 90% to 100% of global sales to be electrified, including both fully electric and plug-in hybrids. Volvo cited factors such as slower-than-expected charging infrastructure development, reduced government incentives, and uncertainties from recent tariffs on EVs.

In 2021, Volvo and Northvolt announced a joint venture to build a gigafactory in Europe, aiming for up to 50 GWh annual capacity, with production expected to begin in 2026.

Northvolt has faced additional hurdles, including difficulties scaling production. BMW recently canceled a €2 billion contract with Northvolt due to delays, opting for Samsung SDI as its EV battery supplier. Earlier this year, Northvolt chairman Jim Hagemann Snabe resigned due to health issues, stepping down from the board.

Northvolt's key actions include placing its cathode active material production facility at Northvolt Ett, the company’s first gigafactory in Skellefteå, Sweden, into care and maintenance to cut costs and optimize production ramp-up. The company is also exiting plans for a cathode active material production facility in Borlänge, Sweden, and has agreed to sell the site. Additionally, Northvolt will integrate its Cuberg subsidiary and lithium metal technology in California into Northvolt Labs in Sweden and will seek partners and investors for its battery module and packs assembly facility in Poland.

While Northvolt has yet to finalize the scale of workforce reductions, it acknowledged that these changes would involve "difficult decisions" to align the workforce with reduced operations.

Peter Carlsson, Northvolt's CEO and Co-Founder, commented:

"With the strategic review now underway, 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. 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."