Production problems may prompt review of Northvolt’s €12.6bn gigafactories

Northvolt’s image of the groundbreaking ceremony at its Drei Batteriezellfabrik, attended by Chancellor Olaf Schultz
Northvolt, the Swedish company that was shaping up to be Europe’s champion in the lithium-ion battery sector, is reconsidering its expansion plans following production problems at its factory in the Swedish city of Skelleftea, near the Arctic Circle.

The company, whose losses tripled to more than $1bn last year, said on Tuesday that its chair, Jim Hagemann Snabe, was stepping down from the board.

Snabe, who also chairs Siemens, will not return after six months of sick leave after he contracted a life-threatening infection while swimming in the ocean.

Tom Johnstone will continue as interim chair until a replacement is named.

The company has also postponed its plans for an initial public offering from this year to next.

Peter Carlsson, Northvolt’s chief executive and co-founder, told the Financial Times that the company was encountering problems in emulating the performance of Chinese and South Korean battery makers.

He 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.”

Northvolt is developing a factory with Volvo near Gothenburg, southern Sweden, and sites near Hamburg and Montreal.

The Drei factory in Germany, which began construction in March, was to have employed 3,000 people and to have had an annual production of 60GWh.

This project, which was to have commenced production in 2026, is expected to cost €4.5bn, including a €900m contribution from the German federal government and the state of Schleswig-Holstein.

The €5bn Montreal plant is also planned as a 60GWh facility, and was also due to begin operations in 2026.

The €2.6bn Gothenburg plant, which is due to complete next year, is to have a capacity of 50GWh.

Carlsson said these schemes may be reconsidered, telling the FT that the company was “spending a lot on all our different construction sites” and that this would form part of the strategic review.

The company recently lost a $2bn contract from BMW, which is one of its investors, to Samsung SDI.

According to the FT, Northvolt has raised €15bn in debt and equity – the most of any start-up in Europe – but has failed to produce at scale in its first gigafactory.

The plant has a nominal capacity of 16GWh a year, enough to power more than a quarter of a million EVs, but is producing “a tiny fraction” of that.

Carlsson declined to comment on the exact output levels but said Northvolt would produce about 1GWh this year if it managed to quintuple production.

He added that it should produce “a handful” of GWh in 2025, and aimed to reach profitability in 2026.

To add to its problems, the company was forced to stop production at Skelleftea last year after the deaths of two workers in separate accidents. It is also facing a police investigation after three workers from different departments died at home this year.

Another factor in play is a cooling in the rate of growth of the EV market. Automotive News Europe notes that lower-than-expected demand has prompted automakers to delay rollout plans, while material suppliers such as Umicore and BASF have cancelled projects.

Carlsson told the FT that he was confident Northvolt would overcome its difficulties. He said: “We’ve been a media darling. We’ve been in a downturn a couple of times. It’s never fun when you have a headwind. But to some extent, it makes you even more determined and focused.”

  • Subscribe here to get stories about construction around the world in your inbox three times a week.

Further reading:

Story for GCR? Get in touch via email: [email protected]

Leave a comment

Your email address will not be published. Required fields are marked *

Latest articles in News