May 8, 2025 | Stockholm — NOVO Energy, a Swedish battery joint venture partly owned by Volvo Cars, has announced a sweeping restructuring plan in response to the recent bankruptcy of its key technology partner, Northvolt, and mounting pressures across Europe’s energy storage sector.
Workforce Reduction and Factory Scale-Down
As part of the restructuring, NOVO Energy will lay off approximately 50% of its current workforce. The layoffs affect employees across R&D, supply chain, and operations, with only essential staff retained to maintain the ongoing construction of its Skellefteå gigafactory. According to company statements, the facility—initially planned for 15 GWh annual capacity—will now be scaled back to just 5 GWh, enough to serve selected Volvo EV models.
The company aims to complete 80% of factory construction by late Q3 2025, with limited commissioning expected thereafter.
Fallout from Northvolt’s Bankruptcy
Northvolt, once hailed as Europe’s battery champion and a pivotal technology partner to NOVO Energy, filed for bankruptcy in April 2025 due to delayed commercialization of solid-state battery tech and massive cost overruns. NOVO Energy had co-invested around €230 million into joint R&D efforts with Northvolt, which have now been suspended indefinitely.
Without Northvolt’s technological and financial backing, NOVO Energy must now reassess its roadmap and product strategy, particularly in advanced cell technologies.
Market and Structural Challenges in Europe
The restructuring reflects broader structural challenges faced by Europe’s battery ecosystem. Key issues include:
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High Energy Costs: European gigafactories face electricity prices 30–50% higher than those in Asia.
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Incomplete Supply Chains: Reliance on imported lithium, cobalt, and graphite continues to hamper cost control.
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Technology Gap: European firms trail China by 2–3 years in mass production of next-gen batteries, such as solid-state and high-nickel chemistries.
Recent data from BloombergNEF shows a 22% year-on-year decline in Europe’s EV battery installations in Q1 2025. Asian players—especially CATL and LG Energy Solution—have gained significant share, reducing European companies’ market share to just 18%.
Strategic Outlook and Industry Reactions
Despite its downsizing, NOVO Energy stated it “remains committed to long-term industrial growth in Europe” and is evaluating a three-phase recovery plan. However, analysts express skepticism. According to a Morgan Stanley research note, unless EV penetration in Europe rebounds beyond the 25% target this year, NOVO Energy may become a candidate for acquisition.
South Korean battery leaders LG Energy Solution and Samsung SDI have reportedly expressed early interest in acquiring idle European assets, though no formal negotiations have begun.