Battery company Volvo Cars to cut half its workforce

Volvo Cars' battery division, Novo Energy, announced on Monday it was cutting 50% of its workforce as part of a cost-cutting programme. The decision follows a review of strategy following the bankruptcy of Sweden's Northvolt, which was originally a co-owner of the company.

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Novo Energy was founded in 2021 by Volvo Cars and Northvolt to build an electric car battery plant in Gothenburg, on Sweden's west coast. Following the March collapse of Northvolt - a company considered Europe's hope in battery technology - the fate of Novo Energy has been in doubt.

Novo Energy CEO Adrian Clarke said that despite all efforts to ensure business sustainability and an active search for a new technology partner, current economic and market conditions do not allow the company to continue operating at the same level.

The first layoffs started back in January, when 30% of Novo Energy employees were dismissed. The new wave of layoffs announced on Monday will affect another 150 people, a company spokesman told Reuters.

Volvo Cars, part of the Geely Group, bought out Northvolt's stake in Novo Energy for a token sum. Volvo Cars itself is also facing difficulties, with its chief financial officer saying in April that he did not expect a major investment in the near future. However, Novo Energy said that keeping the Gothenburg battery project alive remains its long-term goal.

The company said it will continue limited operations, focusing on completing the first phase of the plant's construction, and in parallel will consider scenarios to return to full operations.

Although construction of the plant is almost complete, the battery production equipment has not yet been installed there, emphasised Volvo's new CEO Hakan Samuelsson. Finding a technology partner remains a priority, he said, but it is likely that production capacity will have to be shared with other Geely brands.

Source: Reuters