Timing of Northvolt’s Quebec battery plant in question as it cuts jobs, looks for strategic partners

Northvolt AB, the Swedish battery maker building a $7-billion factory in Quebec, said on Monday it will shrink its operations in Europe and cut jobs as a slowdown in electric-vehicle demand forces the company to rethink its ambitious plans. Northvolt is making the cuts amid a review of its strategy as auto makers such as General Motors Co. , Ford Motor Co.

, Volvo Car AB and Volkswagen AG temper their projected EV outlooks and spending plans to deal with high capital costs and some resistance among car buyers who face sticker shock and still-spotty charging infrastructure. The battery maker, which counts Canadian pension plans among its investors, said it is proceeding with its project in Saint-Basile-le-Grand, Que..

, near Montreal. However, the timing is uncertain. Northvolt announced the project last year, with the federal and Quebec governments kicking in billions of dollars in loans and production incentives.

Then-Quebec minister for economy and energy Pierre Fitzgibbon said early this month that completion could be delayed by 12 to 18 months. On Monday, Northvolt did not confirm the length of any delay at its Quebec factory. “We remain committed to our project in Quebec, while taking action to strengthen our core business in Sweden,” Paolo Cerruti, chief executive officer of Northvolt’s North American operations, said in a statement.

“Northvolt’s strategic review continues, and the right pace of execution for all expansion projects is still under discussion.” Northvolt’s plant is among half a dozen major battery plants worth tens of billions of dollars announced by auto makers and others in Quebec and Ontario in the past two years, as governments seek to make Canada a top supplier to the industry. With its cost-cutting moves, the company said it is responding to “a challenging macroeconomic environment.

” “With the strategic review now under way, we are having to take some tough actions for the purpose of securing the foundations of Northvolt’s operations to improve our financial stability and strengthen our operational performance,” Peter Carlsson, Northvolt’s chief executive officer, said in a statement. Several major auto makers have scaled back plans to convert their products to electric power from internal combustion engines, with GM and Ford among those cancelling and pushing back the rollout of some models. Both of those companies have announced battery factories in Canada.

In the first quarter of this year, global EV sales fell by 900,000 units from the previous quarter to 3.4 million, with China logging the largest drop and sales flatlining in the rest of the world, according to the International Energy Agency. However, sales were 30.

7 per cent higher than the first quarter of 2023. The industry is now trying to gauge whether lower interest rates and the eventual introduction of more affordable products could lead to a resumption in large growth rates. Today’s tough environment notwithstanding, Northvolt is confident in a long-term move to electrification, which bodes well for battery makers, Mr.

Carlsson said. Among its cost-cutting moves, the company is putting its Northvolt Ett Upstream 1 cathode active material plant in Skellefteå, Sweden, on hold until further notice. It is selling another Swedish property in Borlänge that had been earmarked for cathode active material production as well.

Northvolt also said it would seek partners and investors for a battery plant in Gdańsk, Poland, that would be Europe’s largest. Meanwhile, the company is moving its California-based lithium metal technology unit to Sweden, it said. The company did not say how many jobs would be cut.

However, it must now make “difficult decisions” to match the work-force size with the reduced scale of operations, and is in talks with unions, it said. Besides sticking with the projects in Canada and Poland, Northvolt said it is committed to those in Gothenburg, Sweden, and Heide, Germany, and that it is in talks with stakeholders at all the locations. “As for the timelines, potential revisions of these projects will be confirmed this fall,” it said.

Northvolt is owned by several partners, including Volkswagen, BMW, Scania and Goldman Sachs Asset Management. The Canada Pension Plan Investment Board, the Ontario Municipal Employees Retirement System and Caisse de dépôt et placement du Québec have also invested in the company..