Lithium battery maker Northvolt has halted the expansion of its gigafactory in Skellefteå, Sweden, which aimed to add 30 GWh of annual cell manufacturing capacity. Instead, it said it will focus on the ramp-up of the first 16 GWh phase of the Northvolt Ett facility and prioritise commitments to its current automotive customers.
Northvolt Ett said it has increased cell production at the Northvolt Ett facility threefold since the beginning of this year.
The announcement of a slowdown in expansion follows the battery maker’s decision earlier this month to place the Northvolt Ett cathode active material facility into “care and maintenance”.
Northvolt also said it is slowing down programmes and expansion at Northvolt Labs in Västerås, Sweden, maintaining only its “fundamental platforms” for battery innovation and product development.
The reduction in the scope of its operations and programmes in Sweden means Northvolt will also reduce the size of its corporate support functions, mainly located in Stockholm.
Together the curtailment of activity is expected to result in the redundancy of approximately 1,600 employees, split across Skellefteå (1,000 positions), Västerås (400 positions) and Stockholm (200 positions). The company said it was looking at a workforce reduction of approximately 20% at a global level, and 25% in Sweden.
“While overall momentum for electrification remains strong, we need to make sure that we take the right actions at the right time in response to headwinds in the automotive market, and wider industrial climate,” said Peter Carlsson, CEO and co-founder of Northvolt, “We now need to focus all energy and investments into our core business.”
Carlsson said a successful ramp-up of production at Northvolt Ett is critical for delivering batteries to its existing customers and the tough decisions it was taking now are required for the company’s future.
Slowdown in adoption
The rate of growth in sales of battery electric vehicles (BEVs) has slowed in Europe and the US over the last year and a half, and a number of carmakers have adjusted their production plans to compensate. Earlier this month Toyota was reported to be revising EV production targets and Ford has also reoriented its model plans. Last year Volkswagen Group said the automotive industry was “experiencing a general reluctance [by customers] to buy battery-powered models” and that “the overall market trend… fell short of expectations”. Recent analysis by Ultima Media’s business intelligence unit indicates that mainstream consumers are proving harder to please in terms of the viability and practicality of transitioning to BEVs, which are more expensive and no longer subsidised to the same extent. Drivers are also concerned about the availability of charging points and the rising cost of electricity amongst other issues.
Carlsson said Northvolt’s revision to expansion did not conflict with the company’s commitment to establish a European industrial base for battery production. He said the measures taken were necessary to adjust for current realities and enable the long-term success of Northvolt.
“We are determined to overcome the challenges we face, and to emerge stronger and leaner as we continue forward in our work to contribute to a more sustainable society,” said Carlsson.
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