Battery giant Northvolt to lay off staff in huge cost-cutting drive amid EV market slowdown

Northvolt, a key battery producer for Europe’s electric vehicle industry, announced Monday that it plans to cut jobs, shut down one of its sites, and enter into discussions with partners and investors to secure the future of a facility in Poland.

Based in Stockholm, Sweden, Northvolt is one of Europe’s most valuable privately-held tech firms that builds lithium-ion batteries for the electric vehicle industry. It has partnerships with a number of major European automakers, including Volkswagen and Volvo.

Following a strategic review of its business, Northvolt said it had to take “some difficult decisions on the size of our workforce to match the needs of a reduced scale of operations.”

The firm did not disclose details on how many jobs would be affected, stating: “No final decisions have been made on the precise nature of any resizing.”

“We remain in constructive discussions with the unions, and will ensure that every effort is made to minimize the need for redundancies,” the company said in a statement.

The battery maker cited a “challenging macroeconomic environment and our subsequent reassessment of Northvolt’s near-term priorities” as the key reasons behind its decision to embark on the cost-cutting drive.

“As difficult as this will be, focussing on what is our core business paves the way for us to build a strong long-term foundation for growth that contributes to the Western ambitions to establish a homegrown battery industry,” Peter Carlsson, Northvolt’s CEO and co-founder, said in the statement.

Northvolt has faced a litany of pressures in recent months — not least the demand challenges facing the broader electric vehicle industry.

In Europe, registrations of electric vehicles declined 3% year-over-year in the month of May, according to data released by the European Alternative Fuels Observatory in July. Registrations of plug-in hybrids, meanwhile, declined 10% year-over-year, to 226,000.

Northvolt has also faced pressures to deliver on lofty production goals. In June, the firm was dealt a significant setback when BMW, previously a key partner, canceled a deal worth 2 billion euros for the delivery of EV batteries starting from 2024.

BMW said at the time that the deal had been cancelled due to Northvolt being unable to deliver on time.

In addition to making redundancies, Northvolt is also consolidating several of its key battery-making operations across Europe.

In the northern Swedish city of Skellefteå, Northvolt said that its cathode active material production facility, Northvolt Ett Upstream 1, would be placed “into care and maintenance until further notice” to streamline operating costs and optimize the sequencing of a ramp-up in production.

The company’s Northvolt Fem program in the town of Kvarnsveden in Borlänge, Sweden will be terminated, Northvolt said. The company said it had already agreed a sale of the site, which it acquired in 2022, to an unnamed buyer.

In Gdańsk, a city in Poland, meanwhile, Northvolt said it would enter into discussions with potential partners and investors about Northvolt Systems, suggesting either a partial or full sale of the division.

Northvolt Systems, which includes the battery systems production site Northvolt Dwa, is fully owned by the firm.

In the U.S., Northvolt said that it has communicated its intention to integrate its California-based subsidiary Cuberg and lithium metal technology into its Northvolt Labs unit in Sweden.

Northvolt, which was last valued privately by investors at $12 billion, is backed by several notable blue-chip investors.

Backers include BlackRock, the world’s largest asset manager, Goldman Sachs, Volkswagen, Baillie Gifford, an early Tesla investor, and Singaporean sovereign wealth fund GIC.

The company is viewed as a key IPO candidate in Europe’s tech ecosystem.

Early last year, Reuters, citing four unnamed sources, reported that the firm was preparing for a stock market listing that could value the company at north of $20 billion.

CNBC was unable to independently verify the report. Northvolt was not immediately available for comment when contacted by CNBC.