Northvolt is restructuring its business to meet the challenges of a changing economic environment.
Due to a weakening of the demand for electric vehicles and cancellations from major partners, this Stockholm-based firm, which is known to supply lithium-ion battery to automakers such as Volkswagen and Volvo faces difficulties.
Northvolt announced the closing of one production facility and job cuts. It is also exploring other options to sustain its operation in Poland.
Declining EV sales
Northvolt, one of Europe’s largest privately held tech companies and leading innovators in battery technology for electric vehicles on the continent, has earned a solid reputation as a company that provides advanced batteries.
The company is now facing economic headwinds, which have resulted in declining EV sales as well as growing uncertainty within the sector.
Northvolt has taken “difficult” decisions to cut its costs and restructure operations in order to meet these challenges.
In order to reduce the negative impact of the restructuring on the workforce, the company is working with partners and unions.
Site closures and job cuts
Northvolt confirmed it is in the process of determining the extent of the job cuts.
This decision is part of an overall strategy that focuses on the core areas of business and streamlines production processes.
The major change is the shutdown of Northvolt Ett Upstream 1 in Skelleftea (Sweden), which will now be put into “care-and-maintenance until further notice.”
Northvolt also sold the Northvolt Fem program in Kvarnsveden (Sweden) to an unnamed buyer. This further consolidates its production capability to manage costs better.
The slowdown in the EV industry adds to pressure
Northvolt is facing increased challenges as the European EV Market has seen a drop in demand.
The European Alternative Fuels Observatory reports that EV registrations fell by 3% in May compared to last year, while plug-in hybrids registered a 10% drop.
The company is under increased pressure to maintain its key relationships and meet production targets as a result of these market changes.
Northvolt was dealt a serious blow in June when BMW cancelled the EUR2 billion order for battery deliveries that were to start by 2024.
Northvolt’s reported inability to deliver on time led to the cancellation of the contract, further straining Northvolt’s finances.
Northvolt is valued at 12 billion dollars
Northvolt, as part of its ongoing restructuring, is exploring options for the facility it operates in Gdansk (Poland).
Northvolt Systems and its battery system production facility Northvolt Dwa may be sold in part or whole as the company begins discussions with investors and potential partners.
The move is intended to secure funding for stabilizing operations in an extremely competitive market and ensuring sustainable growth.
Northvolt Labs in Sweden is working to integrate its Californian subsidiary Cuberg into Northvolt Labs.
Cuberg is a specialist in lithium-metal battery technology. The integration fits with Northvolt’s plan to consolidate its research and development of advanced batteries.
Northvolt is still a major player in the European tech industry despite current challenges.
The company is valued at 12 billion dollars and has strong support from investors like BlackRock, Goldman Sachs Volkswagen, as well as Singapore’s sovereign fund GIC.
Experts in the industry believe that Northvolt is a good candidate to be listed on the stock exchange soon, and could have a valuation of more than $20 billion.
Northvolt is undergoing a transformation. The company’s focus will be on consolidating operations, forming new partnerships and positioning itself to achieve long-term success within the EV industry.
As new information becomes available, this post Northvolt will cut jobs and suspend operations due to Europe’s failing EV market may change.
