Volvo’s Battery Ambitions Falter as Novo Energy Slashes Workforce Amid Partner Collapse

Volvo Cars’ battery venture Novo Energy has announced a drastic 50% workforce reduction, cutting approximately 150 jobs by 2025, as it grapples with the aftermath of its partner Northvolt’s bankruptcy and struggles to secure a new technology partner. The restructuring, part of broader financial and operational challenges, underscores the fragility of automotive battery ventures in an increasingly competitive and capital-intensive industry.

The cuts mark the second major layoff for the joint venture in under two years, following a 30% reduction in January 2024. Novo Energy, formed in 2021 as a 50-50 partnership between Volvo and Northvolt, was designed to produce up to 50 gigawatt-hours (GWh) of batteries annually at a plant in Gothenburg, Sweden. However, Northvolt’s collapse in March 2024 stripped Novo of critical expertise and financial support, leaving the venture in limbo.

The Financial and Structural Crisis
Northvolt’s bankruptcy, which led to 2,800 job cuts across its operations, dealt a crippling blow to Novo Energy. The Swedish startup had provided both technical know-how and funding for the venture, which now faces a critical gap in expertise and resources. Volvo, which acquired Northvolt’s 50% stake in Novo Energy for a nominal sum in February 2025, has assumed sole responsibility for the venture but has delayed major investments.

The workforce reductions are a cost-cutting measure to sustain operations while Novo seeks a new partner to share the plant or revive its original 50 GWh target. Novo CEO Adrian Clarke admitted that “economic conditions and market challenges” have made maintaining the previous scale impossible. The factory, nearing completion in April 2025, remains empty of battery equipment, as Volvo CEO Hakan Samuelsson noted, signaling a failure to meet the 2026 production start date.

Industry Context and Investor Implications
The restructuring raises critical questions for investors in Volvo and the broader automotive sector. Volvo’s shift toward electric vehicles (EVs) hinges on secure, cost-effective battery supplies. The Gothenburg plant was meant to support production for Volvo’s European plants in Torslanda and Ghent, as well as other Geely Group brands. However, without a new partner, the venture’s future is uncertain, and Volvo may face delays or increased reliance on external battery suppliers.

The financial strain is evident: Volvo’s CFO has stated that major investments in Novo Energy are unlikely in the near term. Meanwhile, competitors like Tesla and BMW have secured or built their own battery partnerships and facilities, creating a competitive disadvantage for Volvo.

Conclusion: A Risky Gamble with an Uncertain Payoff
The 50% workforce reduction at Novo Energy reflects a broader industry reality: battery ventures require massive capital, technical expertise, and stable partnerships to succeed. Novo’s struggles highlight the risks of joint ventures in an era where battery production is both a strategic necessity and a financial burden.

With no new partner secured as of May 2025 and construction stalled, the venture’s original goal of employing 3,000 workers by full capacity has been abandoned. Volvo’s stock has dipped 12% year-to-date, reflecting investor concerns about its EV transition. Meanwhile, competitors like Northvolt’s former clients, including BMW and Volkswagen, are accelerating their own battery partnerships, leaving Volvo’s supply chain in a vulnerable position.

The data paints a clear picture: without a swift solution, Novo Energy’s Gothenburg plant risks becoming a costly white elephant. Investors should closely monitor Volvo’s ability to secure a partner—and the broader financial health of the automaker—as these factors will determine whether the venture can recover from its current crisis. The clock is ticking.