Northvolt has announced that it would be laying off a large part of its workforce and selling or consolidating several sites as the electric vehicle (EV) market slows down.
Swedish battery company, Northvolt, has recently revealed that it would be cutting jobs, as well as closing down or selling some sites, while others would be consolidated, in a massive cost-cutting effort. The company has said that macroeconomic uncertainties, as well as a reorganisation of its short-term priorities are behind this decision.
This move comes as the EV market continues to lose steam in Europe, mainly because of Europe imposing higher tariffs on Chinese electric vehicles.
Northvolt produces lithium-ion batteries which are used in electric vehicles and is one of the most valuable tech companies in Europe, working with other big automotive industry names, such as Volvo and Volkswagen.
However, it has also been hit by the waning interest in EVs, leading to the company having to reduce its operations significantly.
As a result, it has stopped production at Northvolt Ett Upstream 1, its cathode active material manufacturing arm to cut down on operating expenses. Similarly, the company will also sell its Northvolt Fem site in Kvarnsveden, in Sweden.
Northvolt is also considering either a partial or full sale of Northvolt Systems, in Gdansk, Poland and is currently speaking to potential investors and partners about the same.
The company has not yet revealed how many employees may be laid off, citing that it is still talking with unions to find a way to make sure redundancies are kept to a minimum.
Peter Carlsson, the chief executive officer (CEO) and co-founder of Northvolt, said on the company’s website: “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.”
Tom Johnstone, interim chairman of the Northvolt board of directors, also said: “Our success is in part dependent on the overall market ramp-up of electric vehicles and support from stakeholders around us. Equally, we must build on lessons learnt through our journey to date.”
EU’s higher tariffs on Chinese EVs dampening demand
The European Union has recently announced increased tariffs on Chinese electric vehicles imported into the bloc, in an attempt to protect the domestic European automotive market. Speculations about the Chinese government heavily subsidising Chinese EVs, allowing manufacturers to sell them at reduced prices in Europe, have also contributed to this decision.
As a result, Chinese EV maker SAIC now has to pay a 36.3% tariff, with Geely being hit with a 18.8% charge. BYD will have to pay a 17.4% rate.
These increased tariffs have severely discouraged European customers from buying EVs, as Chinese EVs were some of the most popular being sold in Europe. With European EVs retailing for considerably higher prices than their Chinese counterparts, consumers are now thinking twice before going electric.
