Northvolt’s Struggles and Strategic Shifts Amid Production Challenges

Northvolt is cutting 1,600 jobs, suspending expansion plans, and refocusing efforts amid production issues and stiff competition from China. Despite securing significant orders, the Swedish electric vehicle battery maker faces delays and financial losses. The company aims to streamline operations to overcome challenges and bolster European competitiveness.

Northvolt plans to cut 1,600 jobs at its base in Sweden, or about a fifth of its global workforce, as Europe's biggest hope in the electric vehicle battery market struggles with production problems, sluggish demand, and competition from China. The leader in efforts to build a European automotive battery industry said on Monday it would suspend plans for a large expansion of its Northvolt Ett factory in Skelleftea, northern Sweden.

In an effort to cut costs, Northvolt slimmed down its business earlier this month, 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. With Volkswagen among its owners, Northvolt has led a wave of European startups investing billions of dollars in battery production to serve the continent's automakers as they switch from internal combustion engines to EVs.

But the Swedish company has struggled with order delays. Problems scaling up production led BMW to pull a $2 billion order in June. Northvolt said on Monday it would focus on ramping up the first 16 gigawatt-hours (GWh) of annual battery cell production capacity at Northvolt Ett, while shelving a construction project that had aimed at increasing its capacity by another 30 GWh.

(With inputs from agencies.)