Back to News
Northvolt, viewed as one of Europe’s leading battery hopefuls, has reportedly lost a multibillion dollar deal to supply cells to BMW. It seems the company is under pressure, as it is also re-evaluating its plans to build a 100GWh cathode manufacturing facility in Borlange, Sweden. This news also follows recent delays to the construction of its Skelleftea gigafactory in Sweden following two fatal accidents at the plant.
Loss of a major contract
In July 2020, Northvolt and BMW, a shareholder in Northvolt, announced a multibillion dollar contract for the supply of prismatic cells, with deliveries scheduled to begin in 2024. However, at the end of May 2024, Northvolt informed its investors of the cancellation of this contract. Reports indicated that BMW had “lost patience” with Northvolt for two main reasons: the quality of Northvolt’s cells did not meet BMW’s expectations, and BMW’s new vehicle architecture, the Neue Klasse, requires cylindrical cells, which Northvolt currently cannot supply.
BMW’s Neue Klasse
Northvolt operates only one facility at present, with others still under construction or in the planning phases. This single plant must supply all of Northvolt’s existing customers, including BMW, which is clearly insufficient to meet BMW’s demands.
BMW had ordered prismatic cells from Northvolt for its current models. However, for its future Neue Klasse vehicles, BMW will source cylindrical cells from manufacturers such as CATL, EVE Energy, and Envision. BMW needs these cells immediately, and by the time Northvolt scales up its production for prismatic cells, BMW will no longer have a use for them.
Collaboration will not end with BMW
Despite this setback, BMW and Northvolt will not end their collaboration entirely. BMW is still set to receive cylindrical cells from Northvolt’s Heide gigafactory in Northern Germany, with supplies expected to begin in 2028.
Scaling back expansion
In addition to losing a massive contract, Northvolt is also re-evaluating its cathode plant in Borlange, Sweden. In 2022, Northvolt revealed plans to acquire a former paper mill in Borlange and convert it into a gigafactory. The facility was set to produce over 100GWh of cathode materials annually, with operations anticipated to begin by late 2024.
However, a Swedish newspaper reported that the facility had been cancelled. In response, Northvolt released a statement indicating it was engaging in talks with various parties. A Northvolt spokesperson stated, “The discussion is still in progress, and we will provide additional comments once a decision has been reached.”
Rho’s evaluation, what does this mean for Northvolt?
BMW’s decision to cancel its contract adds to Northvolt’s growing challenges and reflects a vote of no confidence in the company. Didi Bostock, analyst at Rho Motion commented “At the end of 2023, and start of 2024, the outlook for Northvolt was positive. It announced a new sodium-ion technology, received nearly a billion euros in funding from the EU and German government and secured a five billion debt financing package – the largest green loan ever recorded in Europe. The company was rapidly expanding in Europe and North America.”
He continued “However, now the outlook is more muddied. Production at its Skelleftea facility is nearly two years behind schedule, a shareholder is unhappy with cell quality and construction of its Canadian facility has been paused due to environmental concerns. In addition to this, the company’s projected output for 2023 was 16GWh, however its actual production was 80MWh, just 0.5% of its projection. Consequently, Northvolt has delayed its planned IPO for 2024 as investor confidence begins to wane.”
By 2030, Northvolt aims to have a total production capacity of 240GWh, positioning it as a key player in the battery space. However, this recent news casts doubt on those ambitions.
More Information
For more information on how our research can support you, get in touch.
Image credit: Northvolt
Sources: Manager Magazine, Northvolt, Dagens industri
For full access to our news and insights, log in to our Membership Platform
If you’re not yet a member and would like a trial, fill in the form below.