Electric vehicle market faces colossal setbacks as key battery maker forced to cut costs
EV market slow down has affected battery production
REUTERS
Swedish battery maker Northvolt has been forced to cut costs and reduce its workflow in order to survive the lapsing interest in electric cars.
The company, which has faced setbacks in recent months and years, said it will now focus on its large-scale cell manufacturing operations.
This decision comes after a major review of Northvolt's strategy which found that in order to succeed, the company would be "dependent" on high uptake in EVs, something which has drastically slowed down.
In addition, prompted by challenges including production delays and the cancellation of a significant order from German automaker BMW, the company said it had to look in a new direction.
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Northvolt said it would focus on long-term outlook of battery production
PAPeter Carlsson, CEO and co-founder of Northvolt, said: “With the strategic review now underway, we are having to take some tough actions for the purpose of securing the foundations of Northvolt’s operations to improve our financial stability and strengthen our operational performance.
"While conditions at this time are challenging, there remains no question that the global transition towards electrification — and the long-term outlook for cell manufacturers, including Northvolt — is strong.”
The company recently faced a major blow when BMW cancelled its £1.67billion electric vehicle battery cells order, but since Northvolt was unable to deliver on its lithium battery contract, the deal was cancelled.
Tom Johnstone, interim chairman of the Northvolt Board of Directors, added that the company's success "is in part dependent on the overall market ramp-up of electric vehicles and support from stakeholders around us".
The company stated that cost-saving mechanisms will be necessary for Northvolt to meet its core objective of focussing on large-scale cell manufacturing.
But it detailed how it would "regrettably include some difficult decisions on the size of our workforce to match the needs of a reduced scale of operations".
Northvolt commented that 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," it remarked.
Carlsson said: “As difficult as this will be, focusing 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."
In line with its focus on large-scale cell manufacturing, Northvolt reaffirmed its commitment to NOVO (Sweden), Northvolt Drei (Germany), and Northvolt Six (Canada).
The electric car market has been waning all year with car manufacturers warning they would struggle to meet the UK’s goal of having at least 22 per cent of new car sales be electric by the end of this year.
It also forms part of the nation's ambition to meet net zero by 2050 which would include a ban on new petrol and diesel cars by 2030, if Labour change the rules as expected.
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PAMike Hawes, Chief Executive at The Society of Motor Manufacturers and Traders said at the time: "The automotive industry is investing billions in decarbonisation and recognises the importance of the zero emission vehicle mandate as the single most important measure to deliver net zero.
"Manufacturers offer a vast range of zero emission vehicles, but demand must also match supply – that means making ZEVs affordable by incentivising drivers to make the switch now and delivering the infrastructure to meet consumer expectations."