Swedish battery developer and manufacturer Northvolt AB announced it will be delaying plans to construct a battery plant in Canada that has already received billions in subsidies as consumer interest continues to decline.
According to an analysis by the Parliamentary Budget Officer, Northvolt was given $2.7 billion in taxpayer subsidies to build the now-delayed Canadian battery plant between the Trudeau government and Quebec’s provincial government.
While the plant was originally expected to be built by 2026, the new date now remains unknown.
Despite being Europe’s leading EV battery manufacturer and being backed by Volkswagen AG, Goldman Sachs, BMW, Siemens and BlackRock, the company is now shifting its focus away from EV batteries to its struggling first gigafactory in northern Sweden.
The factory has been riddled with delays and problems in addition to suffering from European automakers divesting from electric vehicles.
Northvolt confirmed that it would be pausing its cathode active material production, selling one of its sites and instead opting to buy from Chinese or Korean companies on Monday.
The company is also seeking a buyer or partner for its energy storage business based in Gdańsk, Poland.
Northvolt announced a new cost-cutting plan that would “regrettably include some difficult decisions on the size of our workforce,” which currently accounts for 7,000 workers.
News of the company laying off employees comes in addition to the announcement that it will be delaying plans to build three more gigafactories in a joint venture with Volvo Cars that were to be constructed in Canada, Sweden and Germany.
“Building a battery company from scratch is a profoundly capital-intensive and challenging endeavour. We have come a long way … Now it’s time to focus on the core, to learn from the past and to scale up our core business to make sure that we can meet our customers’ expectations and to help Europe achieve a sustainable battery ecosystem,” said Peter Carlsson, Northvolt’s co-founder and chief executive.
European automakers and the relatively new battery industry are poised to face many difficulties ahead, faced with needing massive investments to continue EV production and growing competition from China.
Volkswagen recently warned it may soon also close factories in its home market of Germany while Volvo has abandoned its goal of exclusively selling electric cars by 2030.
BMW also cancelled a USD $2 billion contract with Northvolt recently, opting instead to give it to Korea’s Samsung SDI, due to the availability of supplies.
Korean and Chinese companies are also starting to build battery factories in Europe, however, construction on some has become delayed due to a decline in interest in electric cars.
“As difficult as this will be, focusing on what is our core business paves the way for us to build a strong long-term foundation for growth that contributes to the western ambitions to establish a homegrown battery industry,” Carlsson added.
Similar trends are happening in Canada with Ford completely shifting away from EVs, announcing in July that it plans to build large super duty trucks at an Ontario production plant it had originally intended to use for electric vehicle production.
The automaker’s Oakville assembly complex was set to be converted into an all-electric vehicle plant but Ford has since said it will be investing $2.3 billion into super duty truck production instead.
Despite taxpayers committing $590 million to Ford in the form of a subsidy partnership between the federal and provincial governments to build EVs, the company has delayed all EV plans for at least the next three years and laid off employees in the sector.
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