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Northvolt AB will cut a large number of jobs and sell or seek partners for its energy storage and materials businesses as Europe’s leading battery hope aims to survive by refocusing on its struggling first gigafactory in northern Sweden.
The Swedish manufacturer, which has raised more capital at US$15 billion than any other unlisted European start-up, has been heavily delayed by problems at its factory just below the Arctic Circle as well as suffering from European carmakers slowing their plans to move to electric vehicles.
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Northvolt said on Monday that it would pause its cathode active material production, selling one site and buying instead from Chinese or Korean companies, as well as seeking a buyer or partner for its energy storage business based in Gdańsk, Poland.
The group, backed by Volkswagen AG, Goldman Sachs, BMW, Siemens and BlackRock, has been haemorrhaging cash and said that its cost-cutting plan would “regrettably include some difficult decisions on the size of our workforce”, currently at 7,000 workers.
It will also delay plans, according to executives, to build three more gigafactories — in a joint venture with Volvo Cars in Sweden and in Germany and Canada — but said it would provide further details on that and the number of job cuts later.
“Building a battery company from scratch is a profoundly capital-intensive and challenging endeavour. We have come a long way … Now it’s time to focus on the core, to learn from the past and to scale up our core business to make sure that we can meet our customers’ expectations and to help Europe achieve a sustainable battery ecosystem,” said Peter Carlsson, Northvolt’s co-founder and chief executive.
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Europe’s car-making and nascent battery industries are facing an uncertain future amid huge investments needed to produce EVs and fierce competition from Asia, in particular China. VW has warned it could close factories in its home market of Germany for the first time while Volvo has abandoned its 2030 goal of selling only electric cars.
Northvolt was the first European company to produce a battery cell for EVs from a homegrown gigafactory in late 2021, but has struggled to ramp up production since then. Its gigafactory in Skellefteå has an annual capacity of 16 gigawatt hours but is producing fewer than 1GWh at present.
BMW recently cancelled a US$2 billion contract with Northvolt, instead giving it to Korea’s Samsung SDI, due to the availability of supplies. Korean and Chinese groups are building battery factories in Europe, although some have been delayed because of the slow uptake of electric cars.
Northvolt has also struggled to complete its current round of fundraising, one that is essential for scaling up production in Skellefteå, leading to it needing to cut investments and costs.
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“As difficult as this will be, focusing on what is our core business paves the way for us to build a strong long-term foundation for growth that contributes to the western ambitions to establish a homegrown battery industry,” Carlsson added.
Northvolt, which launched its strategic review in July, intends to focus on cell manufacturing in Skellefteå, raising questions over the future of its recycling and materials operations.
It is also debating what to do with what it heralded as a significant breakthrough in battery technology for energy storage with sodium-ion batteries, which uses no lithium, cobalt or nickel, all materials that companies have rushed to obtain. Although Northvolt is seeking buyers or partners for its energy storage business, executives said it could continue to develop the sodium-ion technology with other companies manufacturing it.
© 2024 The Financial Times Ltd
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