Europe’s most important battery maker is considering scaling back its ambitious expansion plans after setbacks at its Swedish gigafactory pushed it to launch a strategic review.
Northvolt, a pioneer in European battery production at a time when more manufacturers are looking to shift supply chains away from China, said the review could include delays to new factories in Canada, Germany and Sweden.
The Swedish battery maker has suffered several mishaps in recent months after BMW cancelled a €2 billion contract with Northvolt for batteries for its electric vehicles. The German carmaker, which is also an investor in the company, instead handed the contract to Samsung SDI, a South Korean supplier. Last month Northvolt said it was reviewing plans to build a second Swedish factory in Borlange.
It has also struggled to produce at scale at its only factory in Skelleftea, close to the Arctic Circle. The plant has not yet reached its full production capacity, which is estimated at about 16 gigawatt hours, and a planned increase in output is behind schedule. The company now expects the facility to reach full capacity in 2026.
Police in northern Sweden are also looking into the unexplained deaths of three men within a short period after working at the plant in Skelleftea, 385 miles north of Stockholm.
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A spokesman for the company said in a statement: “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.”
The company has raised €15 billion in debt and equity as it attempts to take on Chinese battery makers such as BYD.
In an interview with the Financial Times, Peter Carlsson, Northvolt chief executive, said: “We need to prove that we can match [Asian suppliers] in execution. That’s why we are also doing a strategic overview of our business plan and our growth plan so that the core engine of Skelleftea is getting up and running before we take the next steps of moving along.”
He added that Northvolt was “spending a lot on all our different construction sites” and that this would form part of the strategic review.
Northvolt was created by two former Tesla executives in 2016 and went into production of its first electric battery in 2021. It employs 5,800 people.
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Its latest annual results showed revenue of $128 million and a pre-tax loss of $1.2 billion compared with $107 million and $318 million in 2022, as research and development, production and finance costs swelled.
Carlsson said he was “very confident in our ability to succeed”, adding that “product-wise, we can really compete and we can beat them on product performance”. However, he said that the company needed to improve on its execution.
