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according to reuters, northvolt, europe's largest domestic battery company, recently decided to reduce its business and lay off employees, triggering concerns in europe. according to reports, the scale of global layoffs is about 20%, involving 1,600 positions.

"we need to ensure that the company takes the right actions as it responds to headwinds in the automotive market and the wider industrial environment," northvolt ceo peter carlson said.

the swedish company said it will focus on its core business, which is the manufacturing of battery cells. reuters pointed out that this decision means that, as europe's most developed battery manufacturer, northvolt has abandoned its original mission. it is understood that at the beginning of the company's establishment, northvolt stated that the company's business scope is not only battery manufacturing, but also covers upstream and downstream businesses such as cathode material manufacturing and recycling.

european power battery "no. 1 seed"

northvolt was established in october 2016. as soon as it was established, it attracted attention from all aspects of europe. for europe, which hopes to get rid of its dependence on chinese power batteries, it is urgent to establish its own battery industry. at this moment, northvolt appeared, naturally attracting everyone's attention. of course, northvolt's ability to be so "eye-catching" at the beginning of the company's establishment is inseparable from the founding team. it is understood that most of the founders are executives from tesla.

as the "no. 1 seed" of european power batteries, northvolt is sought after by capital, and corporate giants and investment institutions such as abb, siemens, basf, renault, and the european investment bank have followed suit.

according to statistics, in less than 8 years since its establishment, northvolt has raised more than 10 rounds of financing, totaling up to us$15 billion, making it the largest financing company among european startups.

in addition, european countries have also given the green light to northvolt. in 2017, the eu established the battery industry alliance working group to provide financial and technical support to european battery manufacturers. northvolt has actively participated in the working group since its establishment. in 2022, northvolt received 155 million euros in construction funding from the eu. in january 2024, the german government provided another 902 million euros to support the construction of an electric vehicle battery production plant in northern germany.

investment and support are the foundation, and future development depends on the support of automobile companies. many european car companies have also placed large orders even though the construction of the northvolt factory has not yet been completed. among them, bmw was the first to submit a contract worth 2 billion euros, followed closely by european car companies such as volkswagen, volvo, and scania, with the total order value of approximately us$55 billion.

unable to submit order

europe hopes northvolt can challenge catl. however, northvolt's annual revenue is only us$128 million (contract 900 million yuan), which is only a fraction of catl (400.9 billion yuan).

in fact, northvolt holds us$55 billion in orders. as long as its production capacity is released, it can quickly expand its scale and revenue.

however, northvolt's dilemma is that it is stuck in production capacity. bmw canceled a $2 billion order in june and gave the order to south korean battery supplier samsung sdi due to difficulties producing and delivering batteries, people familiar with the matter and industry sources told reuters. this was the last straw for northvolt and the key factor that forced it to launch a layoff plan.

"the situation becomes increasingly difficult when customers like bmw cancel orders and contracts," a third-party source with direct knowledge of the situation told reuters.

an industry source told reuters that bmw decided to cancel the contract because northvolt was two years behind on batteries for the deal, meaning that by the time of delivery, they would be obsolete.

in addition, volkswagen group's swedish truck manufacturing unit scania told sweden's svenska dagblad newspaper in may that northvolt's delivery problems prevented it from delivering thousands of electric trucks last year.

now it seems that northvolt's future is full of uncertainty.

the flagship plant in skelleftea, northern sweden, is far from full capacity. according to a swedish newspaper, carlsson told the newspaper in july that northvolt planned to achieve initial production of 16 gigawatt hours (gwh) per year by 2026, three years behind its original target.

in addition, northvolt's financial situation in recent years has been unable to make ends meet. according to the 2023 performance report, northvolt's revenue increased slightly from us$107 million in 2022 to us$128 million, while its net loss increased significantly from us$285 million to us$1.168 billion.

in addition, since this year, european car companies such as mercedes-benz, bmw, and volvo have slowed down the pace of electrification, which has also made northvolt's market prospects less bright than before. facing the huge losses caused by insufficient production capacity, what northvolt needs to do now is no longer to challenge the catl era, but to study how to survive in the predicament.

no industrial chain support

europe has been trying to build its own power battery industry chain and catch up with chinese, japanese and korean companies in terms of production capacity. however, judging from the current situation of the "no. 1 seed", it seems that it will basically be unable to catch up in the short term.

northvolt's current predicament may actually be caused by the entire european industrial chain. the power battery industry chain is quite complex, with the upstream mainly consisting of mineral materials and battery materials.

statistics show that the global output of lithium battery anode materials in 2023 will be 1.7621 million tons. among them, china's anode material output has further increased to 97.3%. in terms of shipments, global battery anode material shipments were 1.6795 million tons. among them, china accounts for as high as 95%.

it is understood that the largest lithium mine in europe is currently the adal valley project in serbia. if the project is fully put into production, it is expected to produce 58,000 tons of lithium carbonate per year and manufacture batteries that can meet the needs of 1.1 million cars. however, the lithium mine was shut down in 2022 due to large-scale protests by environmentalists.

in the fields of battery materials, including cathode materials, anode materials, electrolytes, separators, etc., there are almost no domestic suppliers in europe. without the support of the industrial chain, northvolt will be unable to function alone and find it difficult to get out of the predicament.

recently, zeng yuqun, chairman and ceo of catl, said in an interview with nikolai tangen, ceo of norges bank investment management fund, that european battery manufacturers are encountering difficulties in expanding production scale, mainly due to inadequacies in design, processes and equipment. something is lacking.

"if european battery companies do not understand electrochemistry and related side reactions, there will be problems in product design, and potential future risks will not be covered in the design stage." zeng yuqun pointed out that if european battery manufacturers try to expand production capacity, they will face production capacity problems such as low utilization rate and insufficient product reliability will also lead to product safety risks in two to three years. this also reflects from the side that europe has insufficient talent reserves in this area. zeng yuqun said that china has more students willing to study electrochemistry and has cultivated a large number of relevant talents. students from european and american countries are more likely to study majors such as finance and semiconductors. obviously, this is difficult to make up for in a short time.