Battery maker Northvolt said on Monday it would suspend cathode active material production at its gigafactory in Sweden and cut costs under a plan that could lead to job losses as the company scales back its rapid expansion.
Billed as a frontrunner in Europe's effort to build a battery industry of its own, Northvolt is focusing on its large-scale cell manufacturing after a strategic review following a series of setbacks.
It has suffered production delays and the cancellation by BMW (BMWG.DE) of a large order and on Friday it dropped plans for another cathode active material production plant in Borlange, Sweden as part of the review.
"No final decisions have been made on the precise nature of any (workforce) 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.
Northvolt's decision to pause cathode active materials (CAM) production at its Skelleftea gigafactory means the company will need to import it instead, said Daniel Brandell, a research leader at Uppsala University's battery research group Angstrom Advanced Battery Centre.
"This (CAM) is the most complex part of the lithium ion battery, and they don't think that their in-house material is of a good enough quality, and therefore they need to buy it instead and will need to import this from other suppliers," Brandell told Reuters.
The gigafactory, Northvolt's first, has not yet reached full production since it opened in 2021. It has around 3,500 staff, according to the company's 2023 annual report. In total the company has more than 5,000 employees.
Northvolt is part of a wave of European startups investing tens of billions of dollars in lithium-ion battery production to serve the continent's automakers as they switch from internal combustion engine cars to emission-free electric vehicles.
But the growth in EV demand is moving at a slower pace than some in the industry had projected, and competition is stiff from battery producers and automakers in Asia and North America.
Northvolt said on Monday it would start talks with potential partners and investors over its planned factory in Gdansk in Poland.
The company said it remained committed to its planned gigafactories in Germany and Canada, as well as in Gothenburg, Sweden through a joint venture with Volvo Cars though the projects could face delays.
It said the long-term outlook for its sector remained strong.
