Volvo Cars’ battery joint venture, Novo Energy, will cut its workforce in half after a failed search for a new technology partner and the recent bankruptcy of Northvolt, Sweden’s former battery flagship. The drastic measure underscores the mounting challenges for European automakers seeking to secure local battery supply as the electric vehicle transition accelerates.
This article outlines the main reasons for the cuts, details the next steps for Novo Energy and Volvo, and looks at how the Northvolt bankruptcy has upended Europe’s battery landscape.
Mass Layoffs as Cost Cuts Deepen
Novo Energy announced on May 5 that it will lay off 50 percent of its staff, following an earlier 30 percent reduction in January. The new cuts affect another 150 jobs as the company faces an uncertain future. CEO Adrian Clarke stated, “Despite our best efforts to secure our business and an extensive ongoing search for a suitable new technology partner, the current economic challenges and market conditions have made it impossible to maintain our operations at the current scale.”
The move comes after Novo’s co-founder Northvolt declared bankruptcy in March, leaving Volvo as the sole partner. Construction of the Gothenburg battery factory is nearly finished, but battery production has not begun, and no manufacturing equipment has been installed.
Searching for a New Path Forward
Novo Energy will continue limited operations, finalizing the first phase of the factory’s construction and searching for a new technology partner to resume full-scale activities. Producing batteries in Gothenburg remains the long-term goal, but the path forward is unclear.
A Volvo spokesperson reiterated support for Novo’s battery plans but provided no timeline or further details, while CEO Hakan Samuelsson said the plant may eventually need to serve multiple brands under Volvo’s parent company, Geely.
Volvo Set to Take Full Control
Volvo Cars is moving to acquire Northvolt’s 50 percent stake in Novo Energy for a nominal sum, pending final approval. The takeover will give Volvo full ownership of the project. However, Volvo executives have warned of constrained investment in the near term as the company also navigates its own financial pressures and rapidly changing EV market.
Europe’s Battery Hopes Hit Hard by Northvolt Collapse
Northvolt, once heralded as Europe’s battery champion, saw its collapse reverberate throughout the industry. The failure highlights both the risk and the necessity of building a robust, local battery supply for Europe’s automakers. Without strong domestic partners, ambitious EV production targets are in jeopardy, and costly setbacks may continue.
What’s Next for Novo Energy and Volvo?
For now, Novo Energy will maintain a skeleton crew and complete construction at the Gothenburg site, while exploring potential collaborations and preparing to adapt its business model. Long-term success hinges on finding a new partner and building a sustainable operation that meets Volvo’s—and Europe’s—EV ambitions.
