Swedish automaker Volvo Cars shared on Tuesday that it has halted the operations for its battery start-up, NOVO Energy.
The announcement comes amidst a continuous search for an external technology partner for the project and multiple battery developments’ cancellations and delays throughout Europe.
Due to the halt, NOVO Energy announced layoffs for all its 75 workers, after the staff had already halved last May.
The company said the staff reduction was “necessary considering the current situation.”
NOVO Energy confirmed in a statement that its operations – including the construction of its Swedish Gigafactory – will remain paused “until a new technology partner is secured.”
“While Volvo Cars continues to search for a new technology partner, it is currently not possible to share further details about when battery production could start, or in what organisational structure this might happen,” the company added.
NOVO Energy’s History
Founded in 2021 as a joint venture between Volvo Cars and the battery maker Northvolt, NOVO Energy was set to “power the next generation of pure electric Volvo cars,” as stated on its website.
However, after the Swedish battery manufacturer filed for bankruptcy last March in its home country, the China-backed automaker took full ownership of the start-up exactly a year ago.
NOVO Energy planned to have its “first-of-its-kind Li-ion battery Gigafactory” in Gothenburg, Sweden, which started being built in 2023.
The plant was expected to become “one of the largest cell production facilities in Europe” before its construction pause.
Meanwhile, the U.S. start-up Lyten acquired Northvolt’s operations last year and is seeking to revive the Swedish company’s battery factory in Skellefteå.
Battery Projects
The halt of NOVO Energy’s operations is among the numerous battery projects in Europe that have been cancelled or delayed in the last two years.
The struggles have been largely driven by surging costs and a cooling demand for electric vehicles (EVs).
On the other hand, China has been dominating the battery production industry.
Last June, Tesla launched its first grid-scale battery storage project in the country.
Companies across the sector have been pressing the European Union to
increase support for investment in battery manufacturing.
Brussels announced a new automotive package last month, which included a €1.5 billion ($1.7 billion) incentive to “support European battery cell producers through interest-free loans”, the organization stated on its website.
“Our technology partners, the ones we are talking to, that’s one of the questions they ask us – what are the prerequisites for getting financial support within the EU for establishing production? So it’s really, really important,” the NOVO Chair Alexander Petrofski told Reuters.
Volvo Cars Sales
Volvo Cars sold 75,049 vehicles across all powertrains in December, a 2% year-on-year increase.
For the full 2025 year, the Geely-backed automaker’s global sales total was 710,042 units, representing a 7% decrease compared to the previous year.
December marked the strongest month of fully electric vehicles since June 2024 for the automaker.
However, annual figures fell by 13% to 151,830 units.
Meanwhile, sales of plug-in hybrid models faced a slight decrease of 3% to 171,464 units.
