Northvolt isn’t your common EV battery maker. It was acknowledged as certainly one of Europe’s trailblazing inexperienced tech firms and was amongst the primary startups to obtain assist from giants like Goldman Sachs and BlackRock within the up-and-coming discipline.
However issues haven’t been simple for it currently. Final month, the Swedish firm misplaced a profitable $2 billion contract with carmaker BMW, which can also be invested within the firm. The order went to Samsung as a substitute, underscoring the looming menace of Asian competitors for the likes of Northvolt.
Immediately, Northvolt stated it could shut its analysis subsidiary, Cuberg, in San Francisco and transfer its analysis and growth work again to Sweden.
“Today is a sad day for me, the entire Cuberg family that I have known for the last nine years, and the battery industry at large,” Cuberg founder Richard Wang stated in a LinkedIn put up on Tuesday.
The San Francisco-based firm, which spun out of Stanford College in 2015, was acquired by Northvolt three years in the past to broaden its operations in America amid sturdy EV demand.
It’s unclear what the R&D transfer to Sweden typically means for Northvolt’s U.S. operations. The corporate inspired Cuberg staff to use for different roles in its analysis lab in Sweden and its places of work in Montreal, Canada.
Representatives at Northvolt didn’t instantly return Fortune’s request for remark.
Northvolt’s massive second
Northvolt is a giant deal within the EV house—as it really works with a few of the greatest automakers, from Volvo to Volkswagen.
Two former Tesla executives based the corporate in 2017 and its funding now stands at $20 billion by way of debt, fairness and grants.
Whereas Sweden isn’t any stranger to the car-making business, Northvolt has been a flagbearer of Europe’s pioneering contributions to EVs because the first homegrown firm within the battery-making sector in any other case dominated by international locations like China and South Korea.
The corporate expanded operations globally in a comparatively brief span of time, forging partnerships with massive and small automobile firms.
JONATHAN NACKSTRAND—AFP/Getty Photographs
Surviving the EV winter
These wins have been eclipsed lately by some challenges going through the broader EV market and others hurting Northvolt particularly.
As an example, supply delays have impacted Swedish truck firm Scania because it tries to broaden its electrical rigs. Its key manufacturing facility, positioned in Skellefteå, Sweden, has fallen behind in its manufacturing plans. It’s anticipated to solely attain full capability by 2026, which, if achieved, might produce 16 gigawatt hours—sufficient to energy 272,000 vehicles.
Individually, there have additionally been issues surrounding the security of staff at Northvolt’s factories following episodes involving the demise of some staff (the corporate has discovered no connection between their demise and manufacturing facility work).
The EV business has typically seen a droop in demand owing to increased rates of interest, which additionally impression the demand for batteries. This has induced Northvolt’s monetary woes to snowball. Northvolt reported a lack of $1.2 billion in 2023, up almost fourfold from a $285 million loss a 12 months earlier.
The Swedish large stated it could push again its timeline to IPO, now aiming for 2025.
To make sure, a few of these points have damage different battery makers, too. Automotive Cells Firm, a battery maker backed by Stellantis, has halted the development of factories in Germany and Italy. Volkswagen has slowed down its efforts to develop new battery manufacturing facility capacities as nicely.
A confluence of those components prompted a strategic overview of the European battery firm’s operations introduced in July. It might doubtlessly lead to a delay in new Northvolt-led factories because the overview will embody an “evaluation of timelines and capital allocation,” in response to Reuters.
“We have been a little too aggressive in our expansion plans and that is what we are now reviewing,” CEO Peter Carlsson informed Swedish paper Dagens Industri final month.
The overview is about to conclude within the autumn.
There’s no disputing Northvolt’s place in Europe’s EV push. Nonetheless, the place Northvolt goes from right here might rely on the way it overcomes operational setbacks and rethinks its world battery-making growth.
