Volvo Cars has suspended its plans for in-house battery production in Gothenburg, putting its battery factory project in Torslanda on hold. The decision follows the automaker’s inability to secure a new technology partner for Novo Energy, the company established to lead the battery initiative.
As a consequence, all 75 employees at Novo Energy have been laid off.
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A consequence of Northvolt’s bankruptcy
The battery factory was originally conceived as a strategic joint venture between Volvo Cars and Swedish battery manufacturer Northvolt. Operating under the name Novo Energy, the project was intended to produce batteries locally for Volvo’s next generation of electric vehicles, ensuring supply security and tighter integration between vehicle and battery production.
These plans suffered a major setback when Northvolt declared bankruptcy in 2024. After its partner’s collapse, Volvo Cars took full ownership of Novo Energy and began searching for a new technological partner capable of supporting large-scale battery manufacturing. Despite these efforts, no suitable partner has been found.
Without an external technology partner, Novo Energy could not continue operating under its original technical and industrial assumptions. Volvo Cars therefore decided to halt all activities at the site and terminate the entire workforce. According to the company, the move was driven by necessity rather than a shift in strategic priorities.
For the 75 affected employees, the suspension marks an abrupt end to a project that was once seen as a cornerstone of Volvo Cars’ electrification strategy in Sweden.
Long-Term ambitions remain, but without a timeline
Despite the shutdown, Volvo Cars stresses that its ambition to produce batteries locally has not been abandoned. The company maintains that battery manufacturing in the Gothenburg area remains a long-term objective. However, there is currently no timeline for restarting the project, nor is there a confirmed partner in place.
As a result, the battery factory plans remain in limbo, effectively frozen until market conditions or partnership opportunities improve.
While customers are unlikely to feel any immediate impact, the situation highlights the fragility of the European battery industry. Even established automakers such as Volvo Cars face significant challenges when it comes to securing technology partners and managing the cost and complexity of battery production.
