Battery cell manufacturer Northvolt is grappling with significant challenges following the loss of a billion-euro order from BMW and production delays, which have now put its contract with Volkswagen (VW) in jeopardy, according to reports from German publication Automobilwoche.
Volkswagen has reportedly established an internal task force to assess the situation at Northvolt’s battery cell plant in northern Sweden. The initiative aims to evaluate Northvolt’s ability to meet delivery commitments and explore contingency plans if restructuring becomes necessary. Volkswagen, however, has refrained from official comments on these developments.
The issues at Northvolt’s Swedish facility could potentially impact plans for its planned factory in Heide, Schleswig-Holstein. Speculation suggests that construction of the facility may be postponed or even reconsidered entirely, although no final decisions have been reached. Initial construction for the Heide factory commenced recently, with the commencement of battery cell production slated for 2026.
In mid-June, Northvolt announced the dissolution of its contract with BMW, originally valued at two billion euros, citing quality concerns with the supplied battery cells and timing issues. Currently, Northvolt operates only one factory in Sweden, with other planned facilities, including those in Germany and Canada, still in early planning stages.
Questions have arisen regarding Northvolt’s ambitious expansion plans and its ability to maintain production standards. Northvolt CEO Peter Carlsson acknowledged to Dagens industri that the company’s expansion strategy had been overly aggressive and now requires reassessment to refocus on core operations. The company is currently evaluating the timeline for scaling up production across its facilities.
The planned Heide factory in Germany received approval from the EU Commission for a 900 million euro subsidy to support construction. Expected to generate approximately 3,000 jobs, the factory was intended to bolster European OEMs against competition from Chinese manufacturers. Shortly after, Northvolt secured a multi-billion dollar loan to facilitate the ramp-up of its production capabilities.
“It will enable us to realize the full potential of Northvolt Ett and demonstrates that circular, sustainable business practices are fundamental to success in today’s industry,” remarked Peter Carlsson on the recent financial support.
German Chancellor Olaf Scholz emphasized the strategic importance of investments like Northvolt’s, stating, “Investments like Northvolt’s are of strategic importance for our country and for Europe. Germany was, is and will remain a strong industrialized country.”