(Bloomberg) -- Sweden’s Northvolt AB will shed 20% of its global workforce and pause its expansion plans to slow cash outflows as the battery-making firm confronts a burgeoning financial crisis.
The company, which has struggled in its mission to stand up a home-grown supply of electric-vehicle batteries in Europe, said it will reduce its Swedish workforce by 1,600 positions as part of a strategic review that was announced this month.
The money-saving move comes as Northvolt continues to negotiate a new financing pact with its creditors and investors. The company in January secured a $5 billion green loan, taking its overall debt and equity investment to more than $13 billion. Lenders to Northvolt have selected investment bank PJT Partners to help advise on options, Bloomberg News reported last week.
Northvolt’s challenges place Europe’s ambition to build an EV battery-making champion at risk. The business has become increasingly strained this year as Northvolt’s production ramp-up has faltered, demand for EVs has slowed and competition from dominant Chinese battery-cell makers has only intensified. The company has also faced a string of health and safety concerns ranging from worker deaths and injuries to reports of toxic chemical leaks.
Northvolt said Monday it was paring back other plans to focus on raising production at its main plant in Skelleftea, in northern Sweden. Higher battery-cell output would help generate revenue for the company, a goal that’s proven to be a challenge. BMW AG backed out of a €2 billion ($2.1 billion) order in June after experiencing quality issues, while lead investor Volkswagen AG’s Scania trucks has complained of slow deliveries.
The job losses amount to 25% of its Swedish staff, Northvolt said, and 20% worldwide. The local reductions will be split across Northvolt’s main Skelleftea factory, where 1,000 positions will be cut, its plant in Vasteras with 400 positions and Stockholm with 200 positions, according to Monday’s statement. All redundancies are subject to ongoing union negotiations, the company said.
“It’s incredibly sad to have to announce this in a company that you have worked 24 hours a day for during the last eight years,” Chief Executive Officer Peter Carlsson said on local radio. He added that he will provide an update on investor talks once there’s more information. “We are continuously working, in dialog with investors,” he said.
The company said it will suspend an expansion project at Skelleftea, where an added 30 gigawatt hours of annual cell-manufacturing capacity had been planned. The decision follows an announcement earlier this month to place its cathode active material facility “into care and maintenance.”
In Vasteras, Northvolt will slow the programs and expansion at Northvolt Labs.
“It has taken longer and required more efforts here in Skelleftea to ramp up production,” Carlsson said. “Although we have seen positive tendencies in the past few weeks, we have to be more focused, reduce costs and thereby reduce our need for capital to reach profitability sooner.”
--With assistance from Niclas Rolander.
(Updates with more details throughout.)
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