Peter Carlsson shows Governor Helene Hellmark Knutsson around the factory construction.
– Northvolt has immense potential, but their approach is flawed. Despite substantial funding, their processes are faulty, says an engineer, who's worked there for a few years.
The engineer highlights recurring failures that go unaddressed and significant material waste resulting from ill-advised decisions, or even no decisions at all. Another employee, whose section deals with subpar units, was alarmed when the company accelerated production to 100,000 battery cells per week last autumn.
–That's when I knew things would get intense, as half of those cells would inevitably land with us, the employee says.
1. Aiming high
Northvolt's production struggles are no secret. The company itself has acknowledged the challenges of building a battery factory, describing it as a complex endeavor.
– It's like Formula 1 manufacturing, combining semiconductor precision with the scale of the food industry, the ex-CEO Peter Carlsson told Norran in October 2022.
But if others are building factories on a more conventional assembly-line model in China, what makes Northvolt's approach so difficult?
The answer lies in vertical integration. Northvolt's ambition extended beyond mere factory construction and assembly. The company sought to control the entire supply chain, from raw material extraction to battery recycling. This ambitious "loop" vision aimed to create a truly circular system.
2. Green light
But let’s rewind to the summer of 2017. Norran is on-site at Almedalen and gets a chance to chat with the future battery king, Peter Carlsson. The company had just announced its plans for a battery factory in the Nordics—a massive green investment to meet the demand for batteries to drive the electrification of Europe’s automotive industry. And from the very beginning, it was clear that expansion was part of the business plan.
– I see no reason why it should stop at just one factory, said Carlsson at the time.
The restructuring Northvolt is now undertaking was not part of the original blueprint. Initially, rapid growth was the primary focus. The company's founders have often cited the urgent need for a swift green transition to combat climate change, as well as the economic imperatives of scaling up quickly, as the driving forces behind this rapid expansion.
In the summer of 2017, Northvolt had a modest 120 million kronor in the bank and a nascent headquarters under construction. However, the scale of their ambitions required significantly more funding. The planned Skellefteå factory was estimated to cost a 40 billion kronor, while the development facility in Västerås would demand nearly a billion more.
After an initial slow start, investor interest surged. Government grants totalling a relatively modest 600 million kronor, coupled with multi-billion-kronor orders, provided a much-needed boost. The impressive order backlog enabled Northvolt to secure billion-kronor loans, some with interest rates as high as 12 percent. These funds were barely in the company's coffers before new expansion plans were unveiled.
The burgeoning order book necessitated the expansion of the Skellefteå factory, initially from 32 to 40 GWh per year, and later to 60 GWh. Additionally, Northvolt embarked on a new factory project in Salzgitter, Germany, although Volkswagen subsequently acquired Northvolt's stake. Other ventures included a smaller factory in Poland, an investment in a Portuguese lithium refinery, and future plans for factories in Heide, Germany, and Canada.
3. Bumpy road
However, delays inevitably arose. Construction took longer than anticipated, and it wasn't until the end of December 2021 that the first battery was successfully produced in Skellefteå.
– We closely monitored each production step, and when the cell finally rolled off the assembly line, there were big cheers, Fredrik Hedlund, the factory manager at the time, told Norran.
Fredrik Hedlund
Now, production was poised to ramp up significantly. In May 2022, the company announced its first commercial delivery of battery cells. The factory is finally operational, albeit two years behind schedule. Or was it?
Norran has spoken with numerous individuals over an extended period, who have shared their first-hand experiences of the production process. While none of them wished to be identified, their accounts consistently highlight the most significant challenges faced by Northvolt.
4. Upstream fail
Early challenges arose in Upstream, the division responsible for producing the cathode material. This critical component, a blend of lithium, nickel, manganese, and cobalt (NMC), is essential for energy storage and battery performance. Northvolt claims to produce this material in-house.
– However, they struggled to achieve the required quality standards and were forced to source material externally, reveals an insider with knowledge of the factory's operations.
Northvolt has faced production issues, and Norran's investigation reveals that thousands of tons of materials used in battery production have been purchased from China.
When, in August of this year, Norran revealed Northvolt's purchase of finished materials from China, the company responded that while their "ambition" was to produce these materials in-house, they were simultaneously sourcing them externally. The increased production of battery cells was cited as the reason for the Chinese imports.
– The ramp-up of cell production has outpaced the production of cathode material. To avoid production disruptions and development delays, we've had to rely on larger quantities of external materials during this transitional period, explained Matti Kataja, Northvolt's Nordic press manager.
Initially, the purchased cathode material appeared to have a positive impact on production. In May, a few months after the imports began, newly appointed factory manager Mark Dushesne announced a steady increase in production, which was celebrated with employee gift cards.
Mark Duchesne, former head of Northvolt Ett.
Around the same time, Duchesne told Dagens Industri about the complex production process, unlike the simple assembly lines in car factories where he previously worked. He also highlighted the lack of experienced battery production personnel:
– We didn't have enough people who knew what they were doing, or who had operated these machines, he told the newspaper.
5. China crisis
But he didn't mention the machines themselves, the ones from Wuxi, China, which came with Chinese manuals. These machines were malfunctioning, and no one could operate them.
– When something went wrong, we had to talk to the Chinese, and if weren't available, we had to have a Zoom meeting to fix the problem, says a former factory worker.
In the summer of 2024, the problems escalated. Two fatal accidents had already occurred, and now reports of unexplained deaths began to surface. Police investigations were launched, major customer BMW withdrew a 22 billion kronor order, and Northvolt itself hit the brakes. A strategic review was to be conducted. The expansion had been too rapid.
At the same time, Norran learned that Revolt, the recycling project aimed at turning old batteries into nearly new raw materials, was also struggling.
In an article about Northvolt purchasing cathode material from China, we quoted Mark Duchesne's interview with Dagens Industri:
– We have to recycle too much material. We recycle our own material. I'm Revolt's best customer, he claimed.
Then an email arrived from a Northvolt employee:
– That's not true. Almost nothing goes to Revolt; we struggle to avoid sending waste to Kuusakoski (a Skellefteå recycling plant), the person wrote.
The recycling factory,Revolt Ett at Northvolt Ett
The problem is said to be that most of the machines aren't ready, so only small quantities of the waste can be processed in the company’s own recycling facility.
– It’s a safety issue because it involves hazardous cells. But I don’t think the management and Carlsson are aware that Revolt isn’t operational, because the problems aren’t escalated upward, said the former employee.
6. Hush hush
Many employees who've spoken with Norran have pointed out that issues seem to get stuck somewhere between the C-suite and the shop floor. An engineer with experience in chemical processes explained that they were drawn to Northvolt because of the project's promising presentation.
–They promised a flat hierarchy, but that wasn't the reality. It appears flat, but in actuality, it's more like an ethnically-based hierarchy, which is one of Northvolt's major issues. There's a strong polarization, and a lot depends on who's doing the hiring. The website's claims don't align with the reality. While there are over 100 nationalities represented, there's a lack of collaboration, they said.
Opinions that didn't align with management were often dismissed as unnecessary or unwelcome, the engineer continues:
– Despite my extensive experience in the field, when I pointed out problems or suggested solutions to my manager, it was hushed up.
Another individual described a culture where problems were often concealed rather than addressed:
– The reporting of problems was discouraged, and if they were reported, it was seen to reflect poorly on the manager or team. If issues were reported anyway, they'd often be ignored to maintain appearances.
They argue that problems weren't addressed unless they were directly recognised by management as critical:
–They only considered it a problem if there was an immediate risk to life or property.
Or as one person put it:
– Essentially, you're working for your manager, not the company. I doubt even Peter Carlsson knows how things have been operating in certain areas.
7. Order impact
It's difficult to establish the true state of production. Northvolt is reluctant to disclose specific production figures, stating only that it aligns with customer agreements.
Simultaneously, our research reveals an increase in waste sent to recycling facilities, exceeding the capacity of usual storage locations. In late October, an employee emailed Länsstyrelsen (the County Administrative Board), expressing concern about a "very stressed email from production" regarding the need for temporary outdoor storage of waste, including battery cells, in a tent. The amount of waste transported and registered has steadily climbed throughout the year, with a slight dip more recently.
When asked about the proportion of production delivered to customers, Matti Kataja responded:
– Currently, we're producing and delivering according to our customer contracts.
Regarding the approximately 500 billion kronor order backlog, Kataja explained:
– We're maintaining close dialogue with our key customers to adjust timelines and capacity to our current organisational structure. This collaboration will continue. These recent adjustments will impact the order backlog, but the exact extent is too early to determine.
8. All change
The consequences of Northvolt's strategic review are becoming apparent. In September, 1,600 employees, primarily based in Skellefteå, were laid off. October saw a subsidiary declare bankruptcy, and recently, the company filed for chapter 11 bankruptcy protection in the US. The future of Europe's largest battery investment remains uncertain, but one thing is clear: the company's current approach is unsustainable.
– They're sourcing materials externally and using Chinese machinery in Skellefteå; it's just not an efficient process. They need to improve coordination, one engineer commented.
Northvolt, Northvolt Ett in Skellefteå. Photos taken outside the gates on the same day Peter Carlsson stepped down as CEO.
Regardless of how much funding Northvolt secures as a result of the restructuring process, several people have told us it won't matter if the communication channels between the C-suite and production remain dysfunctional. As one put it:
– There are too many layers between the top and the bottom, with too many people prioritising their own careers over the company's best interests. The company needs to listen to its staff and address problems head-on, not sweep them under the rug. No amount of funding will save the company if it continues to squander resources.
Northvolt's Nordic communications manager, Matti Kataja, had the opportunity to review this article before publication. Here is his full response via email:
"We are an international company with a diverse workforce of employees and managers, and we are proud to have attracted leading experts from around the world.
Northvolt has zero tolerance for discrimination. This principle is fundamental to our code of conduct and applies to all employees. Any employee engaging in discriminatory behaviour is subject to disciplinary action, up to and including termination of employment.
All employees have easy access to report such behaviour and can provide anonymous feedback to the company. We have established procedures for receiving and addressing these reports."