Northvolt, once seen as Europe’s best hope for a homegrown electric vehicle (EV) battery production champion, has shocked the industry by announcing significant cutbacks in its operations.
Canvel Plan for Swedish Factory
The Swedish battery maker, founded by former Tesla executive Peter Carlsson, has faced delays and setbacks, including losing a $2 billion contract with BMW.
Northvolt has now decided to halt production of cathode active material (CAM), a key battery component, cancel its plans for a new Swedish factory, and seek investors for a Polish facility, according to Ziare.
The company will focus on its core business of battery cell production, signaling a major shift in its strategy. This move has raised concerns that Northvolt may no longer fulfill its original goal of offering a comprehensive supply chain, from material production to recycling.
Analysts worry that Europe’s ambition to become a leader in EV batteries could be further weakened by this decision.
Production Delays and Cancellations
Industry experts argue that this development underscores Europe’s increasing dependence on Asia, particularly China, which currently controls 85% of the global battery cell market.
With Northvolt now forced to source key materials from suppliers in China and South Korea, the company faces challenges in meeting its lofty goals while competing with powerful rivals like CATL and BYD.
Despite securing over $50 billion in orders from major clients, including Volkswagen, Northvolt continues to face difficulties producing high-quality batteries in large volumes.
Its production delays led to the cancellation of the BMW contract earlier this year, heightening doubts about the future of its planned gigafactories in Germany, Canada, and Sweden.
The company’s struggles are emblematic of Europe’s broader challenges in reducing its reliance on foreign battery suppliers, a critical hurdle as the EV market continues to grow globally.
