Volvo’s heavy losses trigger major layoffs: 5% at car maker, 50% at its battery firm

Volvo Cars and its battery division, Novo Energy, are making significant workforce reductions as both companies struggle with mounting financial challenges. The Swedish automotive giant has confirmed it will lay off approximately 5% of employees at its Ridgeville plant in the United States, while Novo Energy, its battery arm, will reduce its workforce by 50% as part of a restructuring effort aimed at cutting costs and improving efficiency.

Volvo Cars, which has operated its first U.S. manufacturing facility in Berkeley County since 2015, employs around 2,500 workers at the Ridgeville plant. The decision to reduce headcount was attributed to "changing market conditions" and evolving trade policies, including the impact of tariffs. The company’s spokesperson stressed that the move was part of a broader strategy to navigate ongoing economic uncertainties while safeguarding its long-term prospects in the U.S.

“We aim to support impacted employees and protect as many jobs as possible,” a Volvo spokesperson said in a statement, Reuters reported, “We are balancing our investments with the need to reduce costs and improve efficiency.”

This move follows Volvo’s recent announcement of a “cost and cash action plan” unveiled by CEO Hakan Samuelsson. The plan is designed to streamline production and adjust the company’s operations in line with market shifts and external challenges.

On the other hand, Novo Energy, which was formed as a joint venture between Volvo and the now-bankrupt Northvolt in 2021, is facing its own set of difficulties. The battery manufacturing arm will cut half of its workforce, reducing staff by 150 positions. This follows earlier rounds of layoffs, which had already seen 30% of Novo’s employees let go in January. Despite these cuts, the company remains committed to its long-term goal of producing batteries with a new technology partner in Gothenburg, Sweden, and hopes to resume large-scale operations once conditions improve.

Novo Energy's CEO, Adrian Clarke, explained the rationale behind the drastic workforce reduction. “Despite our best efforts to secure a suitable new partner and address the ongoing economic challenges, it has become impossible to maintain operations at our current scale,” Clarke said. “Our focus is now on adjusting to the market realities and finding ways to move forward sustainably.”

The layoffs at both companies come in the wake of broader struggles within the Swedish automotive sector. In February, Volvo took full ownership of Novo Energy after buying out Northvolt’s 50% stake for a symbolic sum. This acquisition followed Northvolt’s bankruptcy filing in March, a significant blow to the joint venture. With Northvolt’s collapse, Volvo now faces the challenge of identifying a new technology partner to help bring its battery factory in Gothenburg to fruition.

Although the factory’s construction is nearing completion, there are still no battery production lines in place, and the plant remains without equipment. The uncertainty surrounding the plant’s future has prompted Volvo to explore alternative options, including potentially sharing the facility with other brands under the Geely umbrella, Volvo’s parent company.

Despite these setbacks, Volvo is working to minimise the disruption to its workforce and remain focused on future growth. The company’s CFO acknowledged that, while challenges persist, the firm is doing everything possible to balance its resources, invest strategically, and maintain operations through this transitional period. “Our long-term vision remains unchanged, but we must adapt to current realities,” the CFO noted.

For its part, Novo Energy will continue to operate on a reduced scale while it evaluates potential future scenarios for resuming full operations. The company has indicated that it will explore new collaborations and remains committed to the goal of producing batteries in Gothenburg with a new partner, albeit at a smaller scale for the time being.

The layoffs across both Volvo Cars and Novo Energy are part of an ongoing trend within the automotive and technology sectors, as companies contend with inflationary pressures, market slowdowns, and shifting demand for electric vehicles and related technologies. As the industry adjusts to new realities, job cuts and restructuring efforts are expected to continue as firms seek to streamline operations and enhance their competitive edge.