BMW cancels 2 billion euro contract with battery maker Northvolt

It’s a bit like the butterfly effect applied to electric cars. China, which produces them en masse, is flooding the European market with its cheaper models. European competitors are struggling to adapt, despite the announcement of new import taxes. At the end of the chain, the European pioneer of electric batteries Northvolt is paying the price for this new episode of the Sino-European trade war.

BMW confirmed the information on Thursday June 20 from the German specialist magazine Store Manager reporting the cancellation of a contract worth 2 billion euros signed with the Swedish industrialist. “Continent’s largest and most promising battery maker faces production delays,” explain Bloomberg. The German car manufacturer has “cancelled a 2 billion euro order citing quality problems”, continues the American economic media.

Only one factory in operation

The order had been placed “in July 2020 and planned delivery from this year”, relates Electrive. But faced with the accumulated delay, BMW ended up “lose patience”. If the reason given is that of the quality of the first batteries delivered, the real reason, according to the German media specializing in electric cars, is that “Northvolt currently only has one factory in operation in Sweden (and has been since 2022), all the others are still in planning”.

This is notably the case of a mega-factory under construction in Heide, in Schleswig-Holstein, in the north of Germany, the first stone of which was laid with great fanfare on March 25, thanks to the generous contributions of 902 million euros from Berlin and the German Länder.

Monday June 17, Peter Carlsson, the boss and co-founder of Northvolt, called the municipality of Borlänge, in central Sweden, to announce that it would ultimately not set up in this municipality of 40,000 inhabitants. “He told us he had bad news, that the board had decided to drop everything,” told to Dagens Nyheter its mayor, Erik Nises“very critical” regarding the way the company handled the matter.

In the pipeline since 2022, this battery factory project had been postponed several times by Northvolt. The company did not wish to respond to the Swedish daily to explain the reasons for this about-face.

Brake on European projects

That said, “it was entirely predictable”, believes Magnus Henrekson, lecturer at the Research Institute of Industrial Economics in Stockholm:

“Northvolt is a subsidy hunter and others (than Borlänge) apparently offer more generous subsidies.”

Is the electric car industry broken? Succeed in increasing production “is no small matter”, euphemism Bloomberg. Just like producing cheaper vehicles.

Faced with falling demand, manufacturers on the continent are slowing down their battery projects. This is also the case for“Automotive Cells Company, led by Stellantis and Mercedes, (which) has put two of its three production sites on hold in order to consider manufacturing less expensive batteries”.

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