Embattled green technology player Northvolt has missed some internal targets and reduced production at its battery cell plant in northern Sweden, according to internal documents and company sources, underscoring the challenge of ramping up production.
Two unpublished documents reviewed by Reuters, marked “Production Plan 2024,” show that since early September Northvolt has consistently failed to meet weekly production targets for deliverable cells, or cells deemed good enough to be delivered to customers. customers. They include data as recent as the week ending November 10.
The documents show, along with the targets for each week, the goal of reaching 51,000 deliverable cells in one week by the end of 2024.
Contacted by Reuters, Northvolt said the targets had been set on September 5 and were “long out of date.” It did not elaborate on its current production targets, which it said are based on contracted deliveries to customers.
Hailed as Europe’s best chance to weaken China’s overwhelming dominance in the electric vehicle (EV) battery market, Northvolt laid off a fifth of its global workforce and scaled back operations in September to stay afloat. The Swedish company, led by former Tesla executive Peter Carlsson, has yet to turn a profit.
Northvolt has been discussing the possibility of filing for Chapter 11 bankruptcy protection in the United States, two sources familiar with the matter told Reuters on November 15. The company declined to comment on the possibility of filing for Chapter 11.
Hit by delivery delays and struggling to produce sufficient volumes of high-quality batteries, Northvolt lost a €2 billion ($2.1 billion) contract from BMW in June.
A Reuters review of internal production sheets, other company documents and conversations with four company sources indicates that Northvolt continues to face challenges in increasing production levels of battery cells, the units that store and convert chemical energy into electricity.
For example, in the week beginning Oct. 21, the company delivered just 22,000 cells considered deliverable against a target of 30,000, the documents show, listing weekly targets through the end of the year. In the week ending Nov. 10, there were “more than 20,000 transportable cells,” the company told Reuters.
Such production levels contrast with a target of 100,000 cells per week by the end of the year that the company revealed to Reuters on September 24 and earlier to employees under its “Path to 100,000” roadmap for quality cells.
In response to questions for this article, the battery maker said it did not plan to meet the target, which it called “informal,” this year, the first time it has officially declared it.
“The plan is currently under review based on the execution of our strategic review, which influences how we operate our main Northvolt Ett facility,” Northvolt said.
The company publicly launched the strategic review in July and began publishing its results from September 9. Key actions undertaken as part of the review included adjustments to customer orders and reduction of shift patterns.
“This is a very challenging industry,” Northvolt said in response to a Reuters question about production issues.
“However, we have made great progress this year, to the point where today we are consistently producing, week after week, high-performance cells for our customers.”
Northvolt said in September it had tripled its cell manufacturing levels since the beginning of the year.
Weekly production sheets reviewed by Reuters show that the company has assembled more than 51,000 good cells per week only once between late August and early November. In the week ending November 10, the last week for which Reuters has data, it gathered around 26,000.
Assembled cells go through more production steps and quality checks, a process that can reduce the number of cells considered ready for customers.
The battery maker was sometimes able to meet internal weekly targets earlier in the cell manufacturing process, other documents reviewed by Reuters show.
Company sources, who declined to be identified because they are not authorized to speak to the media, said Northvolt’s problems in increasing production were due to machine failures, inexperienced staff and unrealistic ambitions.
Northvolt said it disagreed with such a characterization.
“For the machines that are in series production, we have very good performance levels,” the company told Reuters.
“Naturally, after installation we have a commissioning period, during which the machines are adjusted and calibrated,” the company said. It added that its staff was the most experienced among all European-based battery manufacturers.
Battery experts say production levels can fluctuate weekly. Manufacturing cells is a delicate process, and experts widely recognize that doing so at scale is a major challenge for any battery manufacturer.
Despite its problems, Northvolt remains ahead of other European battery makers, industry experts say.
PRODUCTION SLOWDOWN
Production at one of two manufacturing buildings at its Skelleftea plant was suspended at the end of October, two of Northvolt’s four sources said, adding that the stoppage was expected to last at least until December.
To cut costs, the company ended its 24/7 production cycle on Nov. 11 and began manufacturing only on weekdays, according to the four Northvolt sources and documents seen by Reuters.
Northvolt confirmed the reduced shifts to Reuters, adding that it was “running fewer production lines than before and focusing on meeting contracted volumes to customers.”
Slowing production can improve cell quality, said Hans Eric Melin, founder of consulting group Circular Energy Storage (CES), which tracks recycling data in the lithium-ion battery market. It allows for more efficient repair and maintenance, according to three of Northvolt’s sources.
Following the cancellation of the BMW order, Northvolt has primarily produced cells for truck maker Scania and luxury car makers Audi and Porsche, brands owned by its largest shareholder, Volkswagen.
Scania said in September it had been receiving Northvolt cells on time and in sufficient quantities after agreeing a new delivery plan. Last year, the truck maker was unable to ship electric trucks to its customers due to Northvolt issues.
“At the beginning of this calendar year, we had a new handshake with them in which we had to realize that they were not able to accelerate at the speed that the market was asking for,” Scania CEO Christian Levin told Reuters last week.
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(Reporting by Marie Mannes; Additional reporting by John Geddie and Maki Shiraki in Tokyo; Editing by Josephine Mason and Lisa Jucca)
