Northvolt isn’t your average EV battery maker. It was recognized as one of Europe’s trailblazing green tech companies and was among the first startups to receive support from giants like Goldman Sachs and BlackRock in the up-and-coming field.
But things haven’t been easy for it lately. Last month, the Swedish company lost a lucrative $2 billion contract with carmaker BMW, which is also invested in Northvolt. The order went to Samsung instead, underscoring the looming threat of Asian competition for the likes of Northvolt.
Today, Northvolt said it would close its research subsidiary, Cuberg, in San Francisco and move its research and development work back to Sweden.
“Today is a sad day for me, the entire Cuberg family that I have known for the last nine years, and the battery industry at large,” Cuberg founder Richard Wang said in a LinkedIn post on Tuesday.
The San Francisco–based firm, which spun out of Stanford University in 2015, was acquired by Northvolt three years ago to expand its operations in America amid strong EV demand.
It’s unclear what the R&D move to Sweden generally means for Northvolt’s U.S. operations. The company encouraged Cuberg employees to apply for other roles at its research lab in Sweden and its offices in Montreal.
Representatives at Northvolt didn’t immediately return Fortune’s request for comment.
Northvolt’s big moment
Northvolt is a big deal in the EV space—as it works with some of the biggest automakers, from Volvo to Volkswagen.
Two former Tesla executives founded the company in 2017, and its funding now stands at $20 billion through debt, equity, and grants.
While Sweden is no stranger to the car-making industry, Northvolt has been a flag-bearer in Europe’s pioneering contributions to EVs as the first homegrown company in the battery-making sector otherwise dominated by countries like China and South Korea.
The company expanded operations globally in a relatively short span of time, forging partnerships with big and small vehicle companies.
Surviving the EV winter
Those wins have been eclipsed recently by some challenges facing the broader EV market and others hurting Northvolt specifically.
For instance, delivery delays have impacted Swedish truck company Scania as it tries to expand its electric rigs. Northvolt’s key factory, located in Skellefteå, Sweden, has fallen behind in its production plans; it is expected to reach full capacity by 2026, which, if achieved, could produce 16 gigawatt-hours—enough to power 272,000 cars.
Separately, there have also been concerns surrounding the safety of workers at a Northvolt factory, following episodes involving the deaths of a few workers (the company has found no connection between their deaths and factory work).
The EV industry has generally seen a slump in demand owing to higher interest rates, which also impact the demand for batteries. This has caused Northvolt’s financial woes to snowball. Northvolt reported a loss of $1.2 billion in 2023, up nearly fourfold from a $285 million loss a year earlier.
The Swedish giant said it would push back its timeline to IPO, now aiming for 2025.
To be sure, some of these issues have hurt other battery makers, too. Automotive Cells Company, a battery maker backed by Stellantis, has halted the construction of factories in Germany and Italy. Volkswagen has slowed down its efforts to grow new battery-factory capacities as well.
A confluence of these factors prompted a strategic review of the European battery company’s operations, announced in July. It could potentially result in a delay in new Northvolt-led factories as the review will include an “evaluation of timelines and capital allocation,” according to Reuters.
“We have been a little too aggressive in our expansion plans, and that is what we are now reviewing,” CEO Peter Carlsson told Swedish paper Dagens Industri last month.
The review is set to conclude in the autumn.
There’s no disputing Northvolt’s place in Europe’s EV push. Still, where Northvolt goes from here could depend on how it overcomes operational setbacks and rethinks its global battery-making expansion.
