Northvolt Faces Production Challenges Amid Strategic Restructuring
Northvolt, Europe’s prominent green tech battery maker, is grappling with significant production challenges at its Skellefteå plant in northern Sweden. Internal company documents and sources reveal missed production targets and operational cutbacks, underscoring the hurdles in ramping up output in a competitive and complex industry.
Missed Targets and Production Slowdowns
Internal production plans marked “Production plan 2024” show that Northvolt consistently failed to meet weekly goals for producing deliverable cells—batteries of sufficient quality for client use—since September. By mid-November, weekly production hovered around 20,000 to 26,000 shippable cells, far short of the company’s September target of 100,000 cells per week under its “Path to 100k” roadmap.
In response, Northvolt acknowledged that its earlier targets were outdated and described the “Path to 100k” as an informal plan. It stated that current production goals align with contracted customer deliveries rather than internal benchmarks.
Operational adjustments followed, including a suspension of production at one manufacturing building in late October, with plans to resume by December. As of mid-November, the company also ended 24/7 operations, reducing shifts to weekdays only.
Northvolt stated the reduced operations are aimed at delivering contracted volumes while optimising quality. This deliberate slowdown is supported by industry experts, who note that lower production rates allow for better machine maintenance and improved cell quality.
Key Challenges in Scaling Up
Northvolt has faced delays due to machine faults, inexperienced staff, and what insiders described as overly ambitious goals. The company disputed these characterisations, asserting that its production machines in serial operation perform well and that its workforce is among the most experienced in Europe.
Battery manufacturing remains a technically challenging process, especially at scale. Despite the setbacks, industry experts acknowledge Northvolt’s position as a leader among European battery makers.
Strategic Adjustments Amid Financial Strain
Northvolt’s struggles coincide with broader financial pressures. In September, the company laid off 20% of its global workforce and scaled down operations to remain solvent. Discussions about a potential Chapter 11 bankruptcy filing in the US have surfaced, though Northvolt declined to comment on the matter.
The company lost a €2 billion contract with BMW in June due to delays in production quality and volume. Since then, it has prioritised orders from Volkswagen Group brands, including Audi, Porsche, and truckmaker Scania.
Scania CEO Christian Levin confirmed a new delivery plan was agreed upon at the beginning of 2023 to address Northvolt’s slower ramp-up. Scania had previously faced delays in delivering electric trucks due to Northvolt’s production challenges but has reported improved deliveries under the revised plan.
Industry Outlook
Despite its issues, Northvolt remains a critical player in Europe’s push to reduce dependence on Chinese EV battery suppliers. The company continues to triple its production levels year-on-year and deliver high-performance cells to its customers.
Looking forward, Northvolt’s ongoing “strategic review,” initiated in July, is expected to guide its efforts in addressing operational inefficiencies and stabilising its financial position.
With inputs from Reuters