Swedish battery maker Northvolt announced on Monday (23 September) that it will lay off almost a quarter of its workforce at a time when the state of the electric vehicle (EV) industry is a growing concern in EU capitals.
The redundancies represent almost a quarter of the company’s staff in Sweden, with about 1,000 jobs being lost in the small northern town of Skellefteå, 400 in Västerås, and 200 in Stockholm.
“It’s very difficult but necessary. It is clear that you can personally feel sad about having to make decisions like this. Not least for the people and families affected”, wrote Peter Carlsson, CEO of Northvolt, in a press release.
Northvolt, the first EU battery manufacturer to supply to European car manufacturers, had major problems getting battery production up to speed to be profitable and raising new capital.
Swedish Minister of Economic Affairs Ebba Busch told Dagens Industri, “This means a tough situation and great concern for those who risk losing their jobs. The government is following developments closely and is in contact with the parties concerned.”
Among those affected by the notice are workers who are not EU citizens but worked there on work permits and risk being forced to leave the country if made redundant.
“The government must find solutions so that those with work permits can stay rather than being forced to leave the country. We need to secure skills and labour so that the economy and Sweden do not lose momentum in the green transition”, said Lorents Burman, Social Democratic chairman of Skellefteå Municipal Council, during a press conference.
Decreased demand for electric vehicles
The crisis suffered by Northvolt and its social consequences are part of a particularly troubled economic context for the electric vehicle industry, which is seeing a fall in sales.
“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.” Northvolt CEO wrote in his press release.
According to the European Automobile Manufacturers Association (ACEA), the number of electric cars sold in the EU in August went down 18% compared to last year’s sales, falling to 643,000 in August.
The pressure of EU car emission rules
In addition to sluggish demand, European carmakers must contend with increasingly stringent European standards, namely the EU car emission rules.
These mandate carmakers to reduce new cars’ average CO2 emissions by 15% by 2025, 55% by 2030 and 100% by 2035 – all compared to 2021 levels – notably by increasing their production of electric cars that are counted as “zero emissions”.
Under EU law, carmakers must meet these stricter targets by 2025 or face steep €95 fines for every extra gram of CO2 each car produces on average.
“The current rules do not account for the profound shift in the geopolitical and economic climate over the past [few] years,” ACEA’s board of directors said in a statement, warning that “the law’s inherent inability to adjust for real-world developments further erodes the competitiveness of the sector.”
Last week, the European Commission even rebuffed calls by parts of the industry to change the 2025 target, arguing the sector “had quite some time to prepare”.
However, with sales of electric cars falling short of expectations, ACEA on Thursday called for a speedier revision of the EU’s car emissions rules, due in 2026, a call also supported by Rome and Berlin, which are keen to protect their car industries.
The Chinese factor
In addition to falling demand and discussions around European rules, the European electric vehicle sector is a bone of contention with China, which has been accused of unfair competition by President of the European Commission, Ursula von der Leyen, who addressed the subject in her State of the Union speech last year.
As Chinese manufacturers have recently launched their electric models in Europe, the Commission wants to impose new tariffs on Chinese e-cars if necessary.
However, with the prospect of a trade war looming, Beijing and the EU have agreed to re-examine the possibility of setting a minimum price for Chinese automakers selling electric vehicles to avoid definitive tariffs of up to 35.3%.
In a statement released after a meeting between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis last Thursday (19 September), the Commission said that Brussels and Beijing would “take a renewed look” at so-called price undertakings.
These are agreements where a trade counterparty pledges to set selling price floors on its products to ward off tariffs.
Jonathan Packroff and Thomas Moller-Nielsen contributed to reporting
[Edited by Alice Taylor-Braçe]
Source: euractiv.com
