Northvolt, Europe’s leading battery maker, is contemplating scaling back its ambitious expansion plans following significant setbacks at its gigafactory in Sweden. The company has launched a strategic review which may delay new factory projects in Canada, Germany, and Sweden.
The Swedish company, which aims to reduce European dependency on Chinese battery supplies, has faced a series of challenges recently. Notably, BMW cancelled a €2 billion contract with Northvolt for its electric vehicle batteries, opting instead for Samsung SDI, a South Korean supplier. This decision is a significant blow as BMW is also an investor in Northvolt. In response, Northvolt is re-evaluating its plans to build a second Swedish factory in Borlange.
Northvolt’s only operational factory in Skelleftea, near the Arctic Circle, has struggled to scale production. The plant has not yet achieved its full production capacity of approximately 16 gigawatt hours, and planned increases in output are behind schedule. The company now anticipates reaching full capacity in 2026.
Adding to the company’s woes, police in northern Sweden are investigating the unexplained deaths of three men who had recently worked at the Skelleftea plant.
A spokesperson for Northvolt stated: “A strategic review is under way at Northvolt, to be concluded in the autumn, involving evaluation of timelines and capital allocation to ensure we are pursuing the most effective build-out of capacity possible. We remain committed to the fundamentals of ambitions we have set out, namely emerging as a leading supplier of sustainable, high-performance batteries.”
Northvolt has raised €15 billion in debt and equity to compete with Chinese battery manufacturers like BYD. However, the company’s latest annual results revealed a revenue of $128 million and a pre-tax loss of $1.2 billion, a significant increase from the previous year’s loss of $318 million, driven by higher research and development, production, and finance costs.
In an interview with the Financial Times, Northvolt’s chief executive Peter Carlsson emphasised the need to demonstrate the company’s ability to match Asian suppliers in execution. He explained that Northvolt is undergoing a strategic review to ensure the core Skelleftea facility is fully operational before expanding further. Carlsson acknowledged the substantial spending on various construction sites and indicated this would be part of the review.
Founded in 2016 by two former Tesla executives, Northvolt produced its first electric battery in 2021 and currently employs 5,800 people. Despite the challenges, Carlsson expressed confidence in Northvolt’s potential, citing strong product performance but acknowledging the need for improved execution.
