Published in Svenska Dagbladet, 2024-09-23. Translated from Swedish.
1,600 employees are losing their jobs at Northvolt in Sweden. Meanwhile, future financing is still not in place. What is actually happening now?
Why is Northvolt making so many redundancies now?
According to the company it is a result of the “macroeconomic climate” and the need to focus on fewer things. The expansion of the Skellefteå factory — which was supposed to triple production capacity — is now on ice. Northvolt Labs, based in Västerås, will continue at reduced pace.
Northvolt has faced serious problems with both production delays and the quality of its batteries. Despite significant improvements during the year, the existing factory is still running at only five percent capacity. Larger changes were therefore expected to be necessary.
How do the layoffs affect Northvolt’s future financing?
Northvolt is laying off around 20 percent of its global workforce. This will lead to a significant cost reduction — but probably not large enough to solve the battery company’s financial problems. It is more likely a condition set by prospective financiers: cut costs substantially before they are willing to invest more money.
The cost savings from redundancies take time to show up on the bottom line. Notice periods can be long and severance pay or similar programmes may apply. Northvolt saving its way out of a crisis is therefore unlikely — this looks more like a restructuring to ensure the financing the company needs can be put in place. Something the company has been forced to do to meet the conditions that financiers are imposing.
How will things go for Northvolt going forward?
The company still faces enormous challenges. CEO Peter Carlsson himself cites macro factors, but there are far more immediate internal issues at play. Persistently low capacity at the factory has caused major delays, and customers — including shareholders like BMW — have cancelled their orders. Northvolt has also experienced several workplace accidents and employee deaths that have not been satisfactorily explained. Reports have emerged that batteries are not meeting the quality standards promised. There is still a great deal that Northvolt needs to resolve.
But the most pressing issue is financing. Northvolt is still in a build-up phase and is losing large sums every month. New financing must be secured for the company to continue operating. Monday’s announcement suggests a temporary solution may at least be on its way — but that financiers are setting tough conditions for it. What appears to be emerging is a different, substantially smaller Northvolt. And it is still not clear who would be willing to fund it.
Can the Swedish state become a shareholder in Northvolt?
Prime Minister Ulf Kristersson has told Swedish Radio that the state will not become a shareholder in Northvolt, but that it may be able to help facilitate the financing process where possible. Northvolt’s Peter Carlsson has himself said that the state — and other stakeholders, including the German government — must contribute to a long-term solution. What that would look like in practice remains unclear.
