Sweden's Northvolt setbacks trigger strategic review

FILE PHOTO: General view outside the Northvolt facility in Vasteras, Sweden, September 29, 2021. Picture taken September 29, 2021. REUTERS/Helena Soderpalm/File Photo

STOCKHOLM (Reuters) - Swedish lithium-ion battery manufacturer Northvolt said on Tuesday it was conducting a strategic review, as it grapples with a series of setbacks.

Northvolt has for years been considered a pioneer in battery cell production in Europe, at a time when many are looking to source its batteries away from China, but in recent months it has suffered a series of negative developments.

Last month it said it was reviewing its plans to build a second Swedish gigafactory, while German premium carmaker BMW said it had canceled a 2 billion euros order for battery cells with the company.

Its chairperson also recently left due to health problems.

"A strategic review is underway at Northvolt, to be concluded in the autumn, involving evaluation of timelines and capital allocation to ensure we are pursuing the most effective build-out of capacity possible," it said in a statement on Tuesday.

Chief Executive Peter Carlsson said in an interview with business daily Dagens Industri on Tuesday Northvolt - which has raised billions of dollars and is mulling an initial public offering of its shares - would consider putting the brakes on planned plants in Heide in Germany and Montreal in Canada.

"We have been a little too aggressive in our expansion plans and that is what we are now reviewing," CEO Peter Carlsson told the paper in an interview.

Northvolt's first factory in Skelleftea, Sweden, has not yet reached its full production capacity, and a planned increase in output is behind schedule. The company now expects the facility to reach full capacity in 2026.

"We need to reassess subsequent steps, and that is currently in progress ... In order to move forward in Germany and Montreal, it's fundamental we've made Skelleftea the parent plant on which the plan is based," Carlsson said.

(Reporting by Stine Jacobsen and Marie Mannes; Editing by Louise Breusch Rasmussen and David Holmes)