Northvolt isn’t your common EV battery maker. It was acknowledged as one in every of Europe’s trailblazing inexperienced tech corporations and was amongst the primary startups to obtain help from giants like Goldman Sachs and BlackRock within the up-and-coming discipline.
However issues haven’t been straightforward for it recently. Final month, the Swedish firm misplaced a profitable $2 billion contract with carmaker BMW, which can 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.
At this time, Northvolt stated it will 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 publish 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 increase 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 an enormous deal within the EV area—as it really works with a few of the largest automakers, from Volvo to Volkswagen.
Two former Tesla executives based the corporate in 2017 and its funding now stands at $20 billion by 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 quick span of time, forging partnerships with massive and small automobile corporations.
JONATHAN NACKSTRAND—AFP/Getty Photographs
Surviving the EV winter
These wins have been eclipsed just lately by some challenges dealing with the broader EV market and others hurting Northvolt particularly.
As an example, supply delays have impacted Swedish truck firm Scania because it tries to increase its electrical rigs. Its key manufacturing unit, situated in Skellefteå, Sweden, has fallen behind in its manufacturing plans. It’s anticipated to solely attain full capability by 2026, which, if achieved, may produce 16 gigawatt hours—sufficient to energy 272,000 automobiles.
Individually, there have additionally been considerations surrounding the security of employees at Northvolt’s factories following episodes involving the loss of life of some employees (the corporate has discovered no connection between their loss of life and manufacturing unit work).
The EV business has typically seen a hunch in demand owing to increased rates of interest, which additionally affect the demand for batteries. This has brought on Northvolt’s monetary woes to snowball. Northvolt reported a lack of $1.2 billion in 2023, up practically fourfold from a $285 million loss a 12 months earlier.
The Swedish large stated it will push again its timeline to IPO, now aiming for 2025.
To make certain, 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 unit capacities as nicely.
A confluence of those elements prompted a strategic assessment of the European battery firm’s operations introduced in July. It may doubtlessly lead to a delay in new Northvolt-led factories because the assessment will embody an “evaluation of timelines and capital allocation,” based on 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 assessment is ready 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 may rely upon the way it overcomes operational setbacks and rethinks its international battery-making enlargement.
