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Location:Home > > Market Intelligence > Lithium-ion Battery | Northvolt Faces Challenges in Achieving Lithium-ion Battery Cell Production Targets

Lithium-ion Battery | Northvolt Faces Challenges in Achieving Lithium-ion Battery Cell Production Targets

Date:2024-11-19
Font size:A+A-
Keyword tags: LiB EU Northvolt
Embattled European battery champion, the Swedish Northvolt, is struggling to meet its inhouse battery cell production targets, according to a report by Reuters on November 18.

The British news agency claims that two unpublished Northvolt documents labeled "Production Plan 2024" reveal that since early September up to the week ending November 10, Northvolt has consistently failed to meet its weekly production goals for deliverable cells. In addition to the weekly production performance, the documents also show that Northvolt had set a target to deliver 51,000 cells in one week by the end of 2024.

However, Northvolt told Reuters that these targets, set on September 5, are “long out of date”. But it did not elaborate on current production targets, stating only that they are based on contracted customer deliveries. 

Reuters also learned from the company's internal production sheets, other company documents, and conversations with four company sources that Northvolt continues to face challenges in boosting production levels for battery cells. For instance, the documents show that in the week starting October 21st, the company delivered only 22,000 cells deemed shippable against a target of 30,000. In the week ending November 10th, there were "more than 20,000 shippable cells," according to the company.

In terms of production volume, Northvolt only exceeded 51,000 cells per week once between the end of August and early November, with only 26,000 cells produced in the week ending November 10. Earlier documents show that the battery manufacturer was occasionally able to meet in-house weekly production targets at earlier stages of the cell manufacturing process.

Source: Reuters

Comparatively, the company had disclosed to Reuters that its weekly delivery target for battery cells was 100,000 units as of September 24th and earlier. Northvolt also stated in September that its battery production had tripled since the beginning of the year.

Anonymous company sources who are not authorized to speak to the media, said that Northvolt's problems in ramping up output stem from faults with machines, inexperienced staff and unrealistic ambitions. Northvolt disagreed with this characterization, stating that machines in serial production have very good performance levels and that there is a period of commissioning following installation during which machines are fine-tuned and calibrated. The company also claimed that its staff is the most experienced among all European battery manufacturers. Fluctuations in production levels on a weekly basis are normal, and scaling up battery production is widely acknowledged as a significant challenge for most battery makers.

In recent months, the crisis-stricken Northvolt has faced quite a couple of setbacks. In June, BMW canceled a 2-billion-euro contract due to delivery delays caused by production issues. In July, Northvolt publicly launched a strategic review and announced cost-cutting measures in September, focusing on core battery manufacturing and reorganizing the management board.

As part of the review, the company adjusted customer orders and reduced shift patterns. Reuters also cited two sources stating that production at one of the two manufacturing buildings in its Skelleftea plant was suspended in late October, with the stoppage expected to last at least until December. To cut costs, the company ended its 24/7 production cycle on November 11th and started manufacturing only on weekdays.

After BMW's order cancellation, Northvolt has primarily focused producing cells for truck manufacturer Scania and luxury car makers Audi and Porsche, which are part of its largest shareholder, Volkswagen Group. Scania stated in September that it planned to equip all its future electric vehicles with Northvolt batteries but has recently been reported that it is talking to other battery cell manufacturers to ensure it does not face supply problems if Northvolt continues to struggle.

Towards the end of October, reports from Bloomberg and others indicated that Northvolt was seeking $300 million in short-term financing. Subsequently, Volvo announced that due to Northvolt's inability to pay all previously agreed payments or investments, Volvo Cars would exercise its right to acquire Northvolt's shares in their joint venture, Novo Energy.

Furthermore, on November 15, Reuters cited two anonymous sources stating that Northvolt is considering the possibility of filing for bankruptcy protection in the United States, although its Plan A remains a financing deal with investors to avoid bankruptcy. However, negotiations with investors have become more difficult in recent weeks, and if they fail, the company may seek bankruptcy protection under U.S. bankruptcy laws.