Stockholm, Sweden – September 10, 2024
The dream of Europe standing up to Chinese battery manufacturers has suffered a significant setback, as Swedish battery producer Nordвольт announced plans to downsize its operations, including layoffs and potential plant closures. Once hailed as the beacon of Europe’s fight against Chinese dominance in the battery industry, Nordвольт’s recent struggles have raised concerns about the continent’s ability to compete in the rapidly growing electric vehicle (EV) market.
Nordvolent’s Restructuring Plan
On September 9, Nordvolent, a Swedish company that was considered a front-runner in Europe’s quest to build a self-sufficient battery industry, revealed its intention to reduce costs by trimming its workforce and streamlining operations. The company plans to shut down, sell, or merge some of its factories, although specific details about the number of job cuts were not disclosed.
In a statement, Nordvolent expressed regret over the need to make some tough decisions regarding employee numbers. The company is currently in talks with labor unions to minimize the impact of the layoffs and has not yet made a final decision.
As part of the restructuring, Nordvolent will expedite the construction of its first mega-factory in Skellefteå, Sweden, focusing on battery production. However, the company will cease the production of cathode materials, a fundamental component of batteries, to cut operational costs.
Challenges in the European EV Market
Nordvolent’s struggles come as the demand for electric vehicles in Europe has failed to meet industry predictions. According to data from the European Alternative Fuels Observatory in July, the registration of electric vehicles in Europe fell by 3% year-on-year in May, while plug-in hybrid registrations dropped by 10% to 226,000 units. The European Union’s data also shows that demand for electric vehicles has stagnated, with growth of just 1.3% in the first half of 2024, compared to 14.6% the previous year.
Intense Competition from Asia and North America
European battery manufacturers like Nordvolent are also facing stiff competition from Asian and North American producers, as well as from car manufacturers. The New York Times highlighted China’s dominant position in the production of key battery materials such as graphite and processed lithium.
Europe’s battery production capacity is 20% to 30% lower than that of China, EU Internal Market Commissioner Thierry Breton told a group of industry leaders in Brussels on September 9.
Nordvolent’s Recent Setbacks
Nordvolent has faced significant pressure to meet high production targets and has recently encountered several major setbacks. The company’s factory in Sweden experienced an accident, and in June, BMW cancelled a €2 billion deal for electric vehicle batteries with Nordvolent due to delivery delays. Last year, Nordvolent reported an annual loss of $1.2 billion.
The challenges faced by Nordvolent are not unique to the company. The European electric vehicle industry is grappling with demand issues. Volkswagen, for instance, recently announced that it might close car manufacturing plants and component factories in Germany due to its extremely tense financial situation. The company also plans to terminate an employment protection agreement signed with unions in 1994, breaking a promise not to lay off workers in Germany before 2029.
Implications for the European Battery Industry
Nordvolent’s struggles raise questions about the future of Europe’s battery industry and its ability to compete with global leaders like China. The company’s downturn could have broader implications for the European Union’s goal of becoming a leader in the EV market, especially as it seeks to reduce its dependence on foreign suppliers.
As the European Union faces the daunting task of investing €800 billion annually to compete with China and the United States, the challenges faced by Nordvolent serve as a stark reminder of the hurdles that lie ahead.
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