Battery Technology Volvo Temporarily Suspends Operations of Novo Energy

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Novo Energy, once established as a joint venture by Volvo and Northvolt and now a subsidiary of the Swedish car brand, must pause its operations – most likely until a new technology partner is found, as Volvo announced.

By 2030, Volvo aims to offer at least 90 percent of its vehicles as fully electric models or plug-in hybrids. To achieve this high level of electrification, a large number of batteries are required, which the company planned and still plans to produce itself in the Gothenburg region. The manufacturer considers the high-voltage battery to be a far too important component to leave its research, development, and production in foreign hands and thereby become heavily dependent. Therefore, it partnered with Northvolt – resulting in the formation of the joint venture Novo Energy in 2021.

After Northvolt ran into difficulties and failed to meet its financing commitments, Volvo exercised its buyback right and acquired the entire shares of the joint venture. However, Northvolt’s insolvency and the generally challenging situation due to weakening demand for electric vehicles and high production costs had an impact on Novo Energy. The company had to cut costs and downsize its workforce – like other battery companies such as Customcells, BMZ, Varta, or Cellforce, some of which had to file for insolvency. At Novo Energy, 50 percent of employees had to leave in spring of the previous year. “Despite our greatest efforts to safeguard our business and an extensive search for a suitable new technology partner, the current economic challenges and market conditions have made it impossible to maintain our operations at the current level,” explained Adrian Clarke, Chief Executive Officer of Novo Energy, in May 2025. “This was an incredibly difficult decision that was not taken lightly.”

The Search for a Technology Partner Continues

Volvo, as the owner of Novo Energy, remains committed to its long-term goal of producing batteries for its electric cars locally, according to company statements. However, an external technology partner is still required, which the company had aimed to secure last year. This process is ongoing. Until a new technology partner is found, Novo Energy can no longer continue its operations as originally planned. This means further layoffs. The company has announced redundancies affecting all positions within the company. Novo Energy has informed the relevant trade unions and notified Arbetsförmedlingen, the Swedish labor market regulatory authority, about a total of 75 positions.

It is currently unclear when battery production might begin or in what organizational structure this could take place—or, as some critics claim, whether it will proceed at all. The completed factory was expected to bring 3,000 new jobs to the region. Originally, battery production was planned to start in 2026. "We had the hope and belief that everything would turn out well, so it's really unfortunate. It’s also regrettable for Gothenburg and West Sweden that this chapter of the story is now coming to an end," said Katarina Atterström, department head at the Sveriges Ingenjörer union, expressing little optimism. (se)