Northvolt is no ordinary EV battery manufacturer: the company is recognised as one of Europe's pioneering green technology companies and was one of the first startups in this emerging sector to be backed by giants such as Goldman Sachs and Blackrock.
But things haven't been so easy recently: Last month, the Swedish company lost a lucrative $2 billion contract with automaker BMW, which also has an investment in Northvolt, to Samsung, which won the deal instead, highlighting the looming threat of competition from Asia for companies like Northvolt.
Northvolt announced today that it will close its San Francisco research subsidiary, Cuberg, and move its research and development operations back to Sweden.
“Today is a sad day for me, for the entire Cuberg family that I have known for the last nine years, and for the entire battery industry,” Cuberg founder Richard Wang said in a LinkedIn post on Tuesday.
The San Francisco-based company, which spun out of Stanford University in 2015, was acquired by Northvolt three years ago to expand in the U.S. amid growing demand for EVs.
It's unclear how the move of research and development to Sweden will affect Northvolt's U.S. operations. The company has encouraged Cuberg employees to apply for other positions at its Swedish labs or its Montreal office.
Representatives for Northvolt did not immediately respond to Fortune's request for comment.
Northvolt's big moment
Northvolt is a big player in the EV space, having partnered with some of the biggest automakers, from Volvo to Volkswagen.
The company was founded in 2017 by two former Tesla executives and has currently raised $20 billion in funding through debt, equity and grants.
Sweden is no stranger to car manufacturing, but Northvolt is the country's first domestic player in a battery manufacturing sector dominated by countries such as China and South Korea, making it a pioneering contributor to Europe's EV movement.
In a relatively short time, the company has expanded globally and formed partnerships with major and small automakers.
The site of the Northvold Ett factory in Skelleftea, Sweden, February 23, 2022.
Jonathan Nackstrand—AFP/Getty Images
Surviving the EV Winter
Those victories have been overshadowed recently by some of the challenges facing the EV market as a whole, as well as others that have hit Northvolt specifically.
For example, Swedish truck company Scania is struggling to scale up its electric trucks and is being affected by delivery delays. Northvolt's main factory in Skellefteå, Sweden, is behind schedule. It is expected to be fully operational by 2026, which would mean it could produce 16 gigawatt hours, enough to power 272,000 cars.
Separately, concerns have been raised about worker safety at Northvolt's plants after several workers died in the incidents (though the company has not confirmed that the deaths were linked to work at the plant).
Rising interest rates have dampened demand across the EV industry, impacting battery demand, and are snowballing Northvolt's financial woes. The company is reporting a $1.2 billion loss for 2023, nearly four times the $285 million loss it saw last year.
The Swedish giant announced it had pushed back its IPO timeline and is now aiming for 2025.
To be sure, some of these issues are hitting other battery makers too: Stellantis-backed battery maker Automotive Cells Co. has halted factory construction in Germany and Italy, and Volkswagen has slowed efforts to add capacity to a new battery factory.
A combination of these factors prompted a review of the European battery company's business strategy, announced in July, which Reuters reported would include an “evaluation of timelines and capital allocation,” potentially delaying the construction of the new factory led by Northvolt.
“We have been a bit too aggressive in our expansion plans and are now reviewing them,” Chief Executive Peter Karlsson told Swedish newspaper Dagens Industri last month.
The review is due to be completed in the autumn.
Northvolt's place in Europe's EV drive is undisputed, but where it goes from here may depend on how the company overcomes business setbacks and rethinks the expansion of global battery manufacturing.
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