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When is raise $ 14 billion not enough ? When you ’re a assault and battery startup .
Northvolt , Europe ’s attempt at work up a competitor to Asia ’s battery manufacturing powerhouses , announced on Monday that it had halt work on a manufacturing plant expansion andlaid off1,600 employees , or about 20 % of the workforce .
The company was planning to dilate its Ett manufactory in northerly Sweden to descale production to 30 gigawatt - 60 minutes per year . The enlargement would have provide cathode active cloth ( CAM ) , a cardinal component postulate to make completed cells . On September 9 , the company also axed another CAM production site in Sweden . Without those factories , Northvolt will almost for sure have to buy it elsewhere , probable from overseas .
The cost cutting is the result of lower - than - expected demand increase , Northvolt said , as automakers trim their forecast for electric fomite production . Execution trouble are credibly also to blame . In June , the society was unable to fulfill an order for BMW on time , leading the German automaker to cancel the € 2 billion contract . Northvolt did not immediately reply to TechCrunch ’s petition for comment , though it ’s hard to see how that did n’t influence the company ’s toll - cut meter .
Ultimately , Northvolt face two challenge .
For one , all battery startups confront significant execution risk . Though barrage appear simple from the outside , the chemistry inside is fiendishly complex . It is n’t easy to develop material that can store vitality safely at high-pitched densities , that can be reload at increasingly high charge per unit , and that can survive for more than a decade inside an automobile . Producing them at a monumental scale only compounds the challenge . Just askGM and LGwhat happens when you do n’t get it veracious .
Northvolt has additional hurdle to outgo . It ’s fundamentally build a copy of what Asian countries like China and South Korea already own : a ripe , scale battery - manufacture sector . Both China and South Korea have been form on it for decades , with reproducible authorities support along the path . By equivalence , Northvolt is only eight years old , and it only recently received satisfying help from the EU and other political science .
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The U.S. tried something similar nearly 20 years ago with A123 Systems . The startup pioneer production of lithium - atomic number 26 - phosphate batteries , which stack away less energy than other chemistry but were more durable and safer to saddle . It started by selling to power tool manufacturer and then start woo carmaker , who even in the former 2000s were projected to buy the kind of volumes that would support declamatory - scale domestic manufacturing .
A123 was in the running to make battery ingroup for the Chevrolet Volt , but after recede out to LG , its only customer ended up being thefirst iteration of Fisker , which was also making a jade - in hybrid . After one of those railroad car arrest flack during Consumer Reports ’ testing , A123 ’s fate was all but sealed .
What those high - visibility stumbles do n’t break were the other obstacle A123 faced , most of which go around around stand up a assault and battery supply chain where there was none . Northvolt has been a second more successful , in part because there is some political appetite to make it happen . But the Swedish company ’s promulgation about curtail CAM production show it ’s still not easy to accomplish .
The second challenge that Northvolt faces is that automakers , its central partners , have n’t been able to decide where they stand on EVs . After years spent talk up the changeover to all - EV lineups , they ’ve since punt off the most aggressive aim . Most automakers ’ early forecasts prove overly affirmative , and they come out to have underestimated the amount they ’d ask to empower to produce successful product . In the face of weaker - than - require tailwind , they have plunge into developing hybrids and sparking plug - in loanblend , which postulate far fewer battery .
To succeed in former markets requires all players to have article of faith . Automakers , section manufacturer , and investors all require to have bought into an EV future tense . If any one of them blinks , they all suffer . Northvolt is feeling that infliction today .
Does it spell the end of battery fabrication in Europe or North America , where Northvolt has plan to expand ? barely . Demand for EVs is still strong and growing . And because batteries are great and expensive to ship , it makes sense to produce them near EV factories . Strong incentives good manners of theInflation Reduction Actand the European Green Deal serve tip the scales further . That does n’t mean Northvolt can be self-satisfied — it still has to try out it can execute . But by the time that gets sorted , it ’s in all probability the market will be ready for it .
