Swedish battery maker Northvolt is scaling back its growth plans, a move that analysts view as a blow to the ambitious plans of the European Union for sovereignty in electric vehicle battery manufacturing.

Northvolt recently announced several steps to be taken as part of its strategic review. In Skelleftea, Sweden, Northvolt intends to place operations at Northvolt Ett Upstream 1 cathode active material production facility into care and maintenance until further notice. This is to streamline operating costs and optimize the sequencing of Northvolt Ett’s ramp-up.

In Borlange, Sweden, the Northvolt Fem programme on the Kvarnsveden site will be terminated.  When Northvolt acquired the site in 2022, it was envisioned as a new facility for cathode active material production. Northvolt has concluded an agreement for the sale of the site.

In Gdansk, Poland, Northvolt aims to assure the successful future of Northvolt Systems, including Northvolt Dwa, Europe’s largest battery systems production facility. To enable this, Northvolt will enter into discussions with potential future partners and investors that can capitalize the production of battery systems and packs.

Northvolt has also disclosed plans to shift the development of its next-generation lithium-metal battery technology from California to its R&D campus, Northvolt Labs, in Västerås, Sweden. 

The company will continue to ramp up the first phase of the Northvolt Ett gigafactory in Sweden. In line with its focus on large-scale cell manufacturing, Northvolt remains committed to Novo ( Sweden ), Northvolt Drei ( Germany ), and Northvolt Six ( Canada ), and is in close dialogue with the key stakeholders involved.

Necessary actions

“With the strategic review now underway, we are having to take some tough actions for the purpose of securing the foundations of Northvolt’s operations to improve our financial stability and strengthen our operational performance," says Northvolt co-founder and chief executive officer Peter Carlsson. "While conditions at this time are challenging, there remains no question that the global transition towards electrification – and the long-term outlook for cell manufacturers, including Northvolt – is strong.”

Northvolt was established in 2016 in Stockholm. Pioneering a sustainable model for battery manufacturing, the company has received US$55 billion in orders from key customers, including BMW, Fluence, Scania, Volvo Cars and Volkswagen Group. The company is currently delivering batteries from its first gigafactory Northvolt Ett, in Skellefteå, Sweden and from its R&D and industrialization campus Northvolt Labs, in Västerås, Sweden, supported by over 5,000 employees in Sweden, Germany, Norway, Poland, Portugal, the United States and Canada.

However, in June this year, BMW cancelled a €2 billion ( US$2.22 billion ) battery order, after delays in Northvolt deliveries.

In January this year Northvolt signed a US$5 billion non-recourse project financing to enable the expansion of Northvolt Ett. The deal was the largest green loan raised in Europe to date.

The debt package included refinancing of the US$1.6 billion debt package raised in July 2020, and was raised on the back of long-term offtake contracts amounting to over US$55 billion with partners including BMW, Scania, Volvo Cars and Volkswagen Group. It was provided by a group of 23 commercial banks, as well as the European Investment Bank and the Nordic Investment Bank, which are both supported by the European Commission’s InvestEU programme.

A significant portion of the commercial facilities are covered with certain guarantees combined with direct funding, provided by The Swedish National Debt Office, Euler Hermes, the Export-Import Bank of Korea, Nippon Export and Investment Insurance, and the Korea Trade Insurance Corporation ( K-Sure ).