This EV Battery Maker Is Now in Trouble

• Swedish EV battery manufacturer Northvolt scales back production and expansion plans amid a perceived slowdown in customer demand for electric models.

• The company revealed that it is suspending cathode active material production at its Skellefteå, Sweden, site, and is also canceling plans for a similar plant in Borlänge, Sweden.

• Northvolt has hinted at impending personnel cuts, in addition to some consolidation of its international operations.

A few years ago Northvolt was busy striking agreements with major European automakers, with Volvo and Volkswagen looking to use the startup's manufacturing base to supply battery packs for planned electric models.

In a short span of time, Northvolt kicked off operations in several countries in the region in preparation for large-scale manufacturing of lithium-ion batteries, with plans for a gigafactory in Gothenburg—Volvo's historic hometown—while also doing its own battery development work. The company was also able to attract plenty of investment, with orders from the likes of Scania, BMW, VW, and others pouring in, as appetites for EVs remained high in the post-pandemic car-buying spree in northern Europe.

Now, amid a perceived EV demand slowdown in several key regions, Northvolt is facing some difficult choices.

"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," said Peter Carlsson, CEO and co-founder of Northvolt.

Northvolt revealed that it plans to suspend cathode active material production at its main Skellefteå, Sweden, site, while also canceling plans for the Borlänge, Sweden, site that was also aimed at cathode active material production. The Borlänge site itself is in the process of being sold.

"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," Carlsson added.

When it comes to its Gdansk, Poland, site, Northvolt has indicated that it is currently looking for investors, hinting at a possible sale of its site.

Northvolt's US operations will be consolidated, with the company revealing plans to integrate the subsidiary Cuberg into Northvolt Labs.

The steps that Northvolt plans to take will include some job cuts, the company indicated, but did not specify how many jobs would be affected.

"The cost-saving mechanisms necessary for Northvolt to meet its core objective of focusing on large-scale cell manufacturing will regrettably include some difficult decisions on the size of our workforce to match the needs of a reduced scale of operations," the company said in a statement.

Overall, the company is viewed as having expanded too quickly in response to surging demand for EVs early in the pandemic—something that has been acknowledged by Northvolt execs—while failing to anticipate softening demand for EVs and PHEVs that began to be observed in early 2023.

Northvolt's announcement also comes amid a recent reassessment of EV market growth and potential by a number of prominent automakers that has already resulted in some cancellations of model plans and production cutbacks.

Will EVs reach even 25% market share in the US by 2030, or will EV adoption stall at a lower point? Share your thoughts in the comments below.