In another blow to the Northvolt story, Volvo Cars (majority owned by Geely) announced that it would be invoking its right to buy out Novo Energy, its gigafactory joint venture with the Swedish battery maker. 

It has been reported that Northvolt breached a shareholder agreement by “not fulfilling its obligations regarding financing” and that Volvo Cars was therefore “reviewing future scenarios to protect the investment”. This year, Northvolt conducted various strategic reviews to assess its future direction after years of positive gigafactory expansion plans. A company statement later revealed that “Northvolt decided to prioritise funding of its wholly owned subsidiary in Skellefteå”.

Northvolt has been in the spotlight more than just about any other battery maker this year. After raising more than €15Bn (US$16Bn), the company has been plagued with challenges and has struggled to produce cells at volume. It is immensely difficult to produce lithium-ion batteries at the GWh scale, where initial inefficiencies can exceed 30% even for more experienced producers. In Northvolt’s case, it has been reported that the company has been operating at just 1/200th of its planned capacity due to exceedingly high manufacturing process losses and cell inconsistencies. This represents a major economic problem, because if yields cannot improve, the financial losses are crippling. 

However, Northvolt is not alone, as many inexperienced battery manufacturers experience the same challenge with scale- up and lack the experience to both rectify issues and identify them ahead of time. Project Blue’s Lithium-ion Batteries Research Service reveals that Europe has a concerningly high proportion of such projects, casting future supply volumes and market balances into doubt.