Swedish battery manufacturer Northvolt, one of Europe’s best-funded climate tech startups, is having a difficult 24 hours. Its €2bn deal to supply battery cells to German car manufacturer BMW has been cancelled — and it has also been reported that it is undergoing a strategic review of a planned factory in Borlänge, Sweden.
"Northvolt and the BMW Group have jointly decided to focus Northvolt's activities on the ambition of developing next generation battery cells," BMW and Northvolt said in a joint statement.
German newspaper Manager Magazin reports that production delays are to blame for the cancellation of the deal, which was agreed in 2020. BMW is one of Northvolt’s key customers — and one of its biggest investors.
This month Bloomberg has also reported that orders of EV batteries to Swedish vehicle manufacturer Scania were not delivered on time, causing the vehicle maker’s production timelines to be pushed back.
Factories in flux
Northvolt, which recently secured $5bn in debt and has raised a total of $13bn to date, has one gigafactory up and running in the north of Sweden. It is also constructing one in Germany and one in Gothenburg, Sweden; with another planned in Canada too.
In the same week that Swedish media Dagens Industri reported that Northvolt is looking to raise more capital, it also reported that plans to open a fourth factory in Borlänge — which would produce materials for the cathode, a part of a battery — had been abandoned. The reports said that the land the site sits on will be sold.
Northvolt has since issued a statement saying no final plans have been made, and it is conducting a review of the site. “That discussion is still ongoing,” a spokesman said.
The Borlänge site was announced in 2022. Northvolt agreed to buy an old paper mill and transform it into a plant to make active materials for the cathode, to be sent to other Northvolt sites for battery manufacturing.
The Borlänge site is part of a wider push at Northvolt to vertically integrate its supply chain. It is also planning a lithium refinery in Portugal, which would see it move further downstream in the battery supply chain.
Northvolt was founded in 2015 and is led by former Tesla exec Peter Carlsson. Its investors include Baillie Gifford, BlackRock and Goldman Sachs.
Editor's note: This article was updated at 5pm on June 20 with additional information about Northvolt and BMW Group's deal being cancelled.
