Restructuring | Major change of direction at Northvolt

Still in deficit, Northvolt is going back to the drawing board. It is pulling the plug on a project in Sweden and refocusing its strategy on a single market segment. The company assures that manufacturing battery cells in Quebec is still in the plans, without guaranteeing the other aspects of its megaproject.

“We need to take tough steps to secure Northvolt’s foundations, improve our financial stability and strengthen our performance,” said co-founder and CEO of the Swedish startup, Peter Carlsson, on Monday, announcing in a press release the first decisions of the strategic review announced last July.

This also means the end of the planned cathode plant – the positive pole of a lithium-ion battery – in Borlänge, Sweden. At Northvolt’s flagship complex in Skellefteå in the north of the country, where more than 3,000 people work, the production of cathodes is being put on hold. The focus will now be on the production of battery cells and their recycling.

Finally, the company is looking for a partner to save an assembly site for energy storage batteries for industrial purposes in Poland. The company is planning layoffs, but says it has started discussions with unions to minimize the impacts.

Refocusing

In order to hope to get out of the red, Northvolt, the most financed European start-up in Europe with a collection of 15 billion US, wants to focus on the manufacture of battery cells, the last step before assembly. In the medium term, it no longer intends to be present in all phases of the production chain.

The diet comes two months after Mr Carlsson publicly admitted in a series of interviews that Northvolt had been “a little too aggressive” in its plans. The manufacturer is struggling to ramp up production of battery cells at its Swedish megafactory.

“It is now time for us to focus on our core business, learn from our experiences and ramp up to meet our customers’ expectations,” Carlsson said in an emailed statement.

The evolution of the electric vehicle market is not unrelated to Northvolt’s readjustment. A drop in sales growth of these vehicles in recent months is leading major manufacturers to review their development strategy for the sector and reduce their production rate.

And Quebec?

In its press release, Northvolt also assures that it is moving forward with its cell manufacturing plants in Germany and Quebec, two projects that have not yet been completed.

On Montreal’s South Shore, the $7 billion project—funded by Quebec and Ottawa—presented in September 2023 has three facets: cell manufacturing, cathode production and battery recycling. While the company reiterates its commitment to the first part in its press release, it is tight-lipped about the other two phases.

“Potential revisions to the timelines for these projects will be confirmed during the fall,” Northvolt said.

This uncertainty is added to the delay of the Quebec project, information revealed by The Press on August 31. Then Minister of Economy, Innovation and Energy, Pierre Fitzgibbon had suggested that the delay could reach 18 months.

“According to what I heard from management [de Northvolt]we were talking about a delay of 12 to 18 months, he said, in an interview with The Press. I think we can assume that there will be a delay of 12 to 18 months. But if that’s all that’s happening, we’ll be fine.”

Quebec confirmed on Monday morning that it had had “discussions with Northvolt” regarding its change of camp.

“Northvolt assures us that their Quebec plant project is in no way called into question and that it remains a priority,” said the office of the new Minister of Economy, Innovation and Energy, Christine Fréchette. The minister intends to follow the file closely.