Northvolt has full latitude to suspend its expansion projects, particularly in Quebec, the company recently indicated in its annual report.
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In 2023, Northvolt recorded a massive loss of nearly CA$1.6 billion, the document, released earlier this month, states.
This loss of US$1.17 billion is four times higher than that of US$285 million suffered in 2022, we learned.
The company’s sales rose 20 percent to $128 million — a much smaller increase than expected, largely due to production problems at Northvolt’s flagship plant in Skellefteå, Sweden.
Strategic review
It is in this context that the company announced a “strategic review” which could lead to a postponement of its factory projects in Quebec and Germany.
The financial report notes that the structure of many of the company’s loans allows it to “grow in a modular manner.”
“If necessary, we could at any time suspend investments in expansion of new plants,” it reads.
“We maintain our commitment to Quebec and our intentions are unchanged,” he nevertheless assured the Newspaper a spokesperson for Northvolt, Emmanuelle Rouillard-Moreau, last week.
“Too ambitious”
Let us recall that in an interview given to the Swedish daily Days Industry 10 days ago, Northvolt CEO Peter Carlsson said: “We were a bit too ambitious in our expansion plans and that is what we are currently reviewing.”
As of 2023, Northvolt has invested US$1.8 billion in capital expenditures and US$1.4 billion in operations. Since its founding in 2016, it has raised over US$15 billion in funding.
Northvolt claims to have received financial assistance of US$5.8 billion from Ottawa and Quebec for its Montérégie plant project, or CA$7.7 billion. This is more than the sum of $7.3 billion communicated during the official announcement of the project in September.
“Nothing to worry about”
At the request of the NewspaperRaphaël Duguay, professor of accounting at Yale University in the United States, took a look at Northvolt’s financial statements.
“I don’t see anything to worry about,” he said. “As it’s still a young company, we can’t expect profitability right now.”
The expert stressed that the company had to resolve the problems at its Swedish plant before duplicating it in Quebec and Germany.
“If we realize that we can’t achieve profitability on the horizon with the model we have in Sweden and we want to reproduce it in Canada, obviously it wouldn’t be viable. So I think they’re doing the right thing.”
Last month, auto giant BMW cancelled a €2 billion ($3 billion) order from Northvolt because of production delays at the battery maker.
Swedish media also revealed that Northvolt would abandon its plans for a cathode active materials factory in the country.