Northvolt’s tribulations are causing headaches far beyond Sweden, as taxpayer-funded electric vehicle battery projects face delays, stretching from Germany to Canada.
Delays in Germany and Canada
A $7.5 billion gigafactory project in northern Germany, undertaken by Northvolt, is expected to see its opening delayed by six to 12 months from the original target of 2026, according to sources familiar with the matter. Additionally, cell production in a Canadian factory, scheduled for the third quarter of 2026, will also require more time. These delays could push back significant production volume by more than a year. Cathode manufacturing and recycling initiatives, planned in the C$7 billion first phase in Quebec, will also be postponed as the company reviews its ambitions.
Despite these delays, Northvolt remains committed to its German and Canadian projects. A spokesperson said the company was in close dialogue with stakeholders and no final decisions had yet been made.
Political repercussions
These delays are leading to criticism of the governments that supported Northvolt, in particular for not having properly assessed the risks before investing billions in these projects. While major shareholders have pledged support for Northvolt, competing with established Chinese and Korean players remains an uphill battle. Sam Adham, head of battery materials at CRU, pointed out that almost all European battery startups have promised more than they could deliver, taking advantage of the hype, but that Europe currently lacks the knowledge -do technical necessary.
Politicians on the defensive
Politicians who supported Northvolt are now on the defensive. The Northvolt Drei factory, located in Heide, Germany, symbolized Germany’s commitment to the energy transition and the creation of a battery supply chain for manufacturers like Volkswagen, Northvolt’s largest investor. Its 60 gigawatt-hour capacity was expected to produce batteries to power up to a million electric vehicles per year.
The federal and regional governments have committed 902 million euros for this project, mainly in the form of grants. Chancellor Olaf Scholz attended the construction launch ceremony last March, alongside Economy Minister Robert Habeck, a native of the region. However, the slow progress of the work could embarrass the German government, already under pressure.
Germany and Sweden react
Despite these delays, German support for the project remains “inflexible” and financial commitments are not affected by the problems encountered in Sweden. However, Sweden recently announced that it would not provide emergency loans to Northvolt or take a stake in the company. BMW, after canceling a €2 billion battery order earlier this year, also refused to help finance it. Volkswagen said it would support Northvolt’s industrial ramp-up, but without giving details.
Canada’s commitment
Canadian officials have pledged up to C$7.3 billion in loans, equity and grants for Northvolt. Some of that money comes from the federal government, but the first payments won’t be made until spending is audited. Quebec has already lent more than a third of its C$1.37 billion commitment for the Northvolt Six project near Montreal.
However, Northvolt is now at the center of a political debate in Canada, with growing concerns over the potential loss of public funds. This liquidity crisis comes after a year of debate over whether to grant Northvolt a waiver from the environmental assessment process to speed up construction.
François-Philippe Champagne, Canadian Minister of Industry, recently tried to reassure the public by affirming that Northvolt’s profitability depends on the North American market and that the Quebec factory is fundamental for its future.
Financial challenges
Northvolt faces financial challenges, in part due to its inability to access at least US$1.5 billion in promised loans. Additionally, some government grants are tied to meeting plant performance milestones, which could be a barrier to obtaining liquidity.
The company recently announced massive layoffs and the reduction of several projects in order to focus on battery production at its main factory in Sweden, near the Arctic Circle. Despite this, Northvolt has reaffirmed its commitment to its joint venture with Volvo in Gothenburg, where work began last March.
Conclusion
Northvolt, despite its commitment to battery projects in Germany, Canada and Sweden, faces a liquidity crisis and significant delays. This puts the politicians who supported these initiatives in an awkward position, as the company tries to stabilize its finances and continue to compete with established players in the electric vehicle battery industry.
With information from Bloomberg and Automotive News
The text Northvolt’s setbacks also affect Germany and Canada comes from L’annuel de l’automobile – Automotive news
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