Swedish batterymaker Northvolt is cutting 1,600 jobs and “rescoping” operations amid electric vehicle headwinds.

Northvolt said it was adjusting ambitions to focus on ramping up the first 16GWh production capacity at its Northvolt Ett cell factory

Following initial steps taken as part of its strategic review earlier this month, the company said it was further adjusting ambitions to ensure that its resources are focused on accelerating production in large-scale cell manufacturing at its Northvolt Ett factory in Skellefteå, northern Sweden.

The struggling battery company will now suspend the Northvolt Ett expansion project, which was intended to provide an additional 30GWh of annual cell manufacturing capacity. The cutbacks will see 1,000 positions made redundant.

Northvolt will also put the brakes on programmes and expansion at its Northvolt Labs site in Västerås, Sweden, resulting in 400 redundancies. The fundamental platforms hosted there will be maintained, which the firm said would enable Northvolt Labs to retain its position as Europe’s leading campus for battery innovation and product development.

Northvolt will also reduce the size of its corporate support functions, which are largely located in Stockholm, resulting in the loss of 200 positions.

Northvolt, which is seeking fresh investment, said it was adjusting ambitions to focus on ramping up the first 16GWh production capacity at its Northvolt Ett cell factory.

The firm added that rescoping of operations was critical to ensure a sustainable operation and cost base. The redundancies, which are subject to ongoing union negotiations, will see around 25% of the workforce in Sweden and 20% globally cut.

Northvolt said it was positioning itself to prioritise commitments to its current automotive customers, supported by a recently introduced acceleration programme geared to further increase levels of production.

The news comes after BMW pulled a €2bn (£1.7bn) deal earlier this year due to delivery delays.

Last week saw the European Automobile Manufacturers Association (ACEA) call for urgent action on EVs as latest data revealed that the battery-electric car market share in August accounted for 14.4% of the EU car market, down from 21% the previous year and marking the fourth consecutive month of decline this year.

Peter Carlsson, CEO and co-founder of Northvolt, commented: “While overall momentum for electrification remains strong, we need to make sure that we take the right actions at the right time in response to headwinds in the automotive market, and wider industrial climate. We now need to focus all energy and investments into our core business.

“Success in the ramp-up of production at Northvolt Ett is critical for delivering to our customers and enabling sustainable business operations. Recent production records at Northvolt Ett show that we are on the right path, but the decisions we’re taking today, however tough, are required for Northvolt’s future.”

The company, seen as Europe’s hope for contending with the big batterymakers in Asia, added that it was “more than ever committed to its founding intention of establishing a homegrown, European industrial base for battery production” and said the latest decisions would establish “a stronger focus on scaling up battery cell production and, thereby, a foundation for future growth”.