Swedish battery maker Northvolt to slash 1,600 jobs, quarter of staff

Sweden's beleaguered electric car battery maker Northvolt said Monday it would cut a quarter of its staff in the country, as it struggles with strained finances and a slowdown in demand.

The loss of 1,600 jobs in Sweden comes as electric car sales slump in Europe and the continent lags far behind China in battery production.

"While overall momentum for electrification remains strong, we need to make sure that we take the right actions at the right time in response to headwinds in the automotive market, and wider industrial climate," Northvolt CEO Peter Carlsson said in a statement.

He added that Northvolt needed to "focus all energy and investments into our core business."

Northvolt, which warned on September 9 that cuts were coming, said that following "initial steps" of a strategic review it estimated that proposed cost-saving measures would result in about 1,000 redundancies at its primary Skelleftea plant -- where an expansion project would be suspended.

Read also

Ethiopians struggle with bitter pill of currency reform

The company had intended to expand the capacity of the facility to provide an annual output of 30 GWh, but will now focus on ramping up to 16 GWh.

In July, it said it hoped to reach an annual production of over one GWh this year -- still far from the facility's capacity.

One GWh is enough to equip 20,000 average sized cars.

"Success in the ramp-up of production at Northvolt Ett is critical for delivering to our customers and enabling sustainable business operations," Carlsson said in a statement.

Another 400 positions would be cut in the city of Vasteras and 200 in the Swedish capital Stockholm.

"The rescoping of operations is critical to ensure a sustainable operation and cost base," Northvolt said.

It added that "to achieve this a workforce reduction of approximately 20 percent at a global level, and 25 percent in Sweden is required."

Read also

UK economic data delivers fresh blow to new govt

Cornerstone

The company employs 6,500 people, according to its website.

Northvolt has been seen as a cornerstone of European attempts to catch up with China and the United States in the production of battery cells, a crucial component of lower-emission cars.

Europe accounts for just three percent of global battery cell production, but has set its sights on 25 percent of the market by the end of the decade.

But the battery maker has also been plagued by production delays, which in May led BMW to drop an order worth 2 billion euros ($2.2 billion).

Northvolt still reports to have contracts worth $55 billion with customers such as Scania, Volvo and Volkswagen.

Volkswagen is also Northvolt's largest shareholder, with a 21 percent stake.

Production delays and lower demand from automotive customers have led to a rapidly deteriorating financial situation, which accelerated at the end of the summer, according to the business daily Dagens Industri.

Read also

Coming winter 'sternest test yet' for Ukraine energy grid

According to Swedish media reports, Northvolt is trying to organise a new share issue to raise 7.5 billion kronor.

The battery maker has also faced scrutiny in Sweden over concerns about work safety at its sites, with Swedish police currently investigating a number of unexplained deaths of factory workers, who died after working at the plant in Skelleftea.

In mid-September, Swedish Prime Minister Ulf Kristersson said that "there are no plans for the Swedish state to become a part owner of Northvolt or anything like that".

Since its creation, the Swedish company has secured $15 billion of credit and capital.

Source: AFP