Europe's battery crisis continues

Northvolt to close its largest plant and make redundancies

Northvolt plant

By: Francesco Barontini

Published by: Brian Potter

Sep 14, 2024 at 4:54am ET

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The European battery industry is going through a difficult period. Many manufacturers are reviewing their plans to go electric, both in terms of car production and cell and battery production. The cause is the general drop in demand for non-polluting cars that characterises the market.

Volkswagen, Stellantis and Mercedes have already scaled back their green transition strategies, and the associated companies PowerCo and ACC have put the brakes on the construction of new Gigafactories around the world.

Even Volvo, one of the brands most convinced that pure electric is the best choice for the future, recently declared that it would only sell battery-powered cars in 2030, but with the caveat: "provided we have the commercial conditions to do so".

Northvolt ceases production

Against this backdrop, one of the companies in difficulty is Northvolt, Europe's largest battery manufacturer, which needs to find a way to control its costs and turn around its financial situation. Northvolt, which has numerous partnerships with the European manufacturers mentioned above (Volvo and Volkswagen in particular), began saying a few weeks ago that it was obliged to carry out a major internal reorganisation to put its accounts in order.

Today it announced that it would be suspending production at its largest plant, Northvolt Ett Upstream 1 in Skelleftea (Sweden), and making redundancies (the number of redundancies was not specified). In addition, it will be looking for new partners to manage the factories in Poland and will be selling a site in Sweden for the production of cathode material.

However, Northvolt has announced that the Swedish plants belonging to NOVO (the joint venture with Volvo) and those of Northvolt 3 in Germany and Northvolt 6 in Canada will continue to operate normally for the time being.

Between postponements and cancellations

It had been clear for some time that Northvolt was sailing in troubled waters. The company had already decided to postpone any future decision on the IPO until a more favourable time had come. Then there was the announcement of the closure of the R&D centre in California.

But that's not all. The Swedish company also faced difficulties in increasing production volumes, which posed a number of problems. It was precisely the inability to meet delivery deadlines that led BMW to cancel an order for cells worth €2 billion. The agreement between the Swedish company and the Munich-based manufacturer had been signed in July 2020 and was intended to guarantee components for the construction of batteries for the iX and i4.

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