Northvolt struggles to meet production targets amid financial challenges

The European battery manufacturing pioneer Northvolt, billed as a key player in avoiding Chinese EV batteries, is struggling to produce its batteries and is financial challenged. But the Swedish company, famed for its cutting edge green technology, has reportedly fallen behind in in house production targets at its northern Sweden facility, raising questions as to its capacity to scale operations.

Sensitive internal documents as recently as November 10 reviewed by Reuters show that Northvolt has consistently failed to meet its weekly production targets for shippable battery cells — that meet client delivery quality standards. At the time, one document had an ambitious target - 51,000 deliverable cells in a single week by the end of 2024, which is looking more and more like an impossible target now.

The targets put forward by the coalition in September were outdated, conceded Northvolt, led by former Tesla executive Peter Carlsson, but could not reveal its current production benchmarks, saying they were on track with contracted customer demands.

These circumstances have further stretched the company’s operational challenges by making it financially distressed. In September, Northvolt announced it was cutting operations on a smaller scale to cut costs, slashing its workforce by 20% amid plans to stabilise finances. Nevertheless, the company has not made a profit and last week lost a 2 billion euros (USD 2.1bn) contract with BMW, among other setbacks, underscoring its troubles.

Northvolt is considering filing for Chapter 11 bankruptcy protection in the United States, sources close to the company say, but have not said anything official.

Late October production data highlight the severity of the problem. Northvolt delivered just 22,000 shippable cells for the week starting October 21, against a target of 30,000. While numbers for the week ending November 10 were a bit higher – topping 20,000 – they are still short of goals.

As Northvolt grapples with missed targets, delayed deliveries, and financial instability, its struggles highlight the complexities of ramping up advanced battery production in a competitive global market. These challenges cast doubt on Europe’s hopes for a robust homegrown EV battery industry capable of competing with dominant Chinese manufacturers.