The Northvolt battery factory in Skellefteå is shelving the production of so-called cathode material – a crucial part of battery manufacturing. This material can be purchased elsewhere, including from China, which is the largest producer of both electric vehicles and batteries in the world.
According to information provided to Norran, hundreds of employees in Skellefteå are affected by the mothballing of Upstream 1.
Hampus Engellau, an automotive analyst at Handelsbanken, believes that there is an overcapacity in the market.
– If you look at the battery market in general, you could say that the planned capacity far exceeds demand. This means that competition is also quite fierce, he tells TT news agency.
For instance, BMW has reduced its commitment with Northvolt, which impacts the Skellefteå factory. At the same time, the entire Western world has become aware of its dependence on China and Chinese components in car manufacturing. Both Europe and the USA are seeking to establish their own battery industries.
As Norran reported yesterday, Northvolt isn't the only battery cell manufacturer facing difficulties. In June, the Automotive Cells Company, a joint venture between Mercedes-Benz, Stellantis, and TotalEnergies, halted its construction of battery cell plants in Germany and Italy, so it could swap to a different cell chemistry.
And, earlier in the summer, the Chinese battery company SVOLT announced it wouldn't be building its plant in Germany, which had been originally announced in September 2022. Meanwhile, the construction of SVOLT's own German plant is still facing delays.
So the fact that the planned capacity for building battery factories far exceeds demand for the next ten years doesn't necessarily mean that Northvolt can't be competitive and successful in the future.
Many of those aforementioned plans, for example, may never materialize.
– I think Northvolt's issue might be that they have had somewhat overly ambitious plans, trying to take on too much at once.
Meanwhile, electric vehicle sales have slowed down.
– Almost all electric car manufacturers who had set targets for how many cars they would sell by 2025 or 2030 have backed away from them because consumer demand hasn't been as strong as expected, says Engellau.