Northvolt’s decision to shrink its operations and cut jobs has sparked fears that Europe’s best shot at a home-grown electric vehicle (EV) battery champion may stall, sector experts and people familiar with the situation told Reuters.
Struggling with order delays and the loss of a two billion dollars BMW contract in June, CEO and ex-Tesla executive Peter Carlsson said on Monday the company he co-founded in 2016 would stop producing cathode active material (CAM) – a crucial battery component – scrap plans for a Swedish facility and seek investors for a plant in Poland.
The Swedish company said it will focus on its core business of making battery cells, the units that store chemical energy.
The decision effectively means Northvolt, Europe’s most developed battery player, has stepped back from its original mission to be an all-in-one shop offering everything from material production and battery making to end-of-life recycling.
Coming just as former European Central Bank head Mario Draghi warned of green tech competition from China in a long awaited report, the announcement raises questions about Northvolt’s ability to be a major force in Europe’s electric mobility push.
“Northvolt was the doyen of European battery industry and if they can’t produce (batteries), it really shows that, industrially, Europe is going to be incredibly dependent on Asia going forward,” said Andy Leyland, co-founder of supply chain specialist SC Insights.
Benchmark Mineral Intelligence analyst Evan Hartley said the scrapping of cathode active material production will put Europe “at a further disadvantage when it comes to local production”.
Northvolt has had problems in manufacturing high-quality batteries in high volumes to meet its ambitious targets while fighting Chinese rivals such as CATL and BYD analysts told Reuters.
Northvolt’s sprawling business has been a complicating factor, they added.
In its strategic review, the company did not address the issue of delays but said it would focus on being a battery cells leader.
