Northvolt will cut more than one in five jobs and suspend the expansion of its main gigafactory as Europe’s leading battery-maker fights for survival. The group said on Monday that it would cut 1,600 jobs in Sweden as part of its effort to attract new capital from investors.
The loss-making group said it had managed to triple its production since the start of the year to 60,000 battery cells a week, but that was still well below an annual level of 1 gigawatt-hour of batteries, the level needed to power about 17,000 cars. Its factory in Skellefteå, northern Sweden, has a capacity of 16GWh, but Northvolt has struggled to increase production since making its first cell in late 2022.
“For somebody who has been working so hard for so many years to build things up, a day like this is, of course, incredibly painful,” chief executive and co-founder Peter Carlsson said. “For me personally, it is not one of the glorious days. On the other hand it is necessary that we do this, that we reduce our costs.”
Northvolt is Europe’s great hope of competing with the dominant Asian players in the battery industry such as China’s CATL and BYD and South Korea’s LG and Samsung. But despite raising $15 billion since its launch – more money than any private European start-up – from the likes of Volkswagen, Goldman Sachs, BMW and Siemens, the Swedish group needs more capital to continue its ramp-up at Skellefteå. It has struggled in recent months to convince investors to participate in a further capital raise amid worries about the slowing uptake of electric vehicles on the continent.
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The Swedish PM on Monday reiterated his comments last week when he ruled out a state-backed rescue of the company.
Mr Carlsson said Northvolt was in “an intense dialogue” with investors, who had demanded that the company reduce its cash needs and improve its path to profitability. Asked if he had considered his own position, Northvolt’s chief replied: “I question myself of course during this tough time. But as long as I have the trust of the employees, the investors and the board I will continue fighting for this company.”
The Swedish battery-maker said on Tuesday that it was suspending its plans to add another 30GWh of capacity at Skellefteå. Mr Carlsson told the FT this summer that it would produce only “a handful” of GWh of batteries in 2025 before hoping to reach profitability the following year.
The job cuts will affect 1,000 workers in Skellefteå, which is 200km below the Arctic Circle; 400 at its research site in Västerås in central Sweden; and 200 at its headquarters in the capital Stockholm. Northvolt has 7,100 workers worldwide, of which 6,400 are in Sweden.
Marie Nilsson, head of IF Metall, Sweden’s largest trade union, told Swedish radio: “It is a dark day for Skellefteå and Västerås. Many of our members are worried about the future, their dreams are being crushed.”
Mr Carlsson acknowledged that sentiment on electric vehicles in Europe was “not as strong as it used to be”.
Northvolt has hinted that its plans for three future factories – one in Sweden in conjunction with Volvo Cars, and one each in Germany and Canada – could be delayed as it focuses on Skellefteå for now.
Mr Carlsson said: “For us to take measures in this time to cut costs and focus on the ramp of phase one in Skellefteå but keeping the optionality of growth with the other sites is both what we think is prudent and what our investors are asking for.”
BMW, one of Northvolt’s first customers and a top 10 shareholder, cancelled a $2 billion contract with the battery-maker earlier this year, handing it to Samsung instead in frustration at the slow ramp-up.
Copyright The Financial Times Limited 2024
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