Swedish battery maker Northvolt has announced a new round of job cuts

The announcement comes as sales of electric cars are falling in Europe and the continent lags far behind China in battery production.

Northvolt said it is placing a facility that produces key battery materials at its main Swedish site in Skelleftea “in care and maintenance until further notice”.

The move follows Northvolt’s recent announcement that it is canceling plans to build a cathode active material production facility in Borlange, Sweden.

“The cost-saving mechanisms necessary for Northvolt to achieve its primary goal of focusing on large-scale cell production will unfortunately include some difficult decisions about the size of our workforce to accommodate the needs of a scale reduced operations,” the company said in a statement.

It did not say how many jobs would be cut.

Northvolt had 5,860 employees at the end of 2023.

Northvolt said the macroeconomic environment was “challenging” and chief executive Peter Carlsson cited the need to “improve our financial stability and strengthen our operational performance”.

Carlsson stressed that despite the setback, “there remains no doubt that the global transition to electrification – and the long-term outlook for cell manufacturers, including Northvolt – is strong.”

The company said it remained committed to large-scale cell production at its factories in Gothenburg, Sweden, Heide, Germany and Montreal, Canada.

However, “potential revisions to the timing of these projects will be confirmed in the autumn, along with any other necessary cost-saving actions.”

Europe accounts for just three percent of global battery cell production – which China dominates – but it aims to catch up and has set its sights on 25 percent of the market by the end of the decade.