By Marie Mannes
STOCKHOLM (Reuters) – Truckmaker Scania has stepped in to help Northvolt with the day-to-day running of its flagship plant in northern Sweden, a last-ditch effort to boost quality and output at the struggling electric vehicle battery maker as it scrambles to secure funds.
Since November, Scania has sent members of staff to Northvolt’s Ett plant located in Skelleftea, 200 kilometres below the Arctic Circle, according to internal Northvolt documents reviewed by Reuters that outline Scania’s support strategy for the green tech player. The plant employs some 2,500 people.
Four Northvolt workers told Reuters they had seen Scania employees, identifiable by an orange visitor armband, inside the factory in recent months, with one saying this was happening as late as this week.
Scania acknowledged to Reuters that it was assisting with the production ramp-up and that it had sent staff to the Northvolt Ett plant for a period, but declined to provide further comment.
Under the support plan, which has not been reported, each Scania staff member is to be paired with a Northvolt shift manager or team leader to “coach” teams while “simultaneously helping to drive improvements and implement standards,” an internal presentation dated early November read.
Reuters could not ascertain the exact number of Scania employees involved in the initiative.
Northvolt, considered Europe’s best chance to create an EV battery champion, downsized drastically last year and filed for U.S. Chapter 11 bankruptcy on Nov. 21 after financing talks with investors and creditors including Scania, Goldman Sachs and Volkswagen collapsed amid persistent quality concerns.
While Scania – a top Northvolt customer – has been close to the EV battery maker from the start, its hands-on involvement in the production process is a recent development and goes beyond its relationships with other customers, a Reuters review of internal documents and court filings as well as conversations with eight sources familiar with the situation showed.
Asked about Scania’s involvement, Mikael Stenmark, chief safety union representative at Northvolt, confirmed to Reuters the truckmaker had been assisting the Swedish group to boost and maintain quality and improve its organisational structure.
“The others (customers) have not been that interested in the same way,” he told Reuters.
One more person with knowledge of Northvolt’s operations said Scania was heavily involved and immersed in the production process.
The Swedish battery-maker, whose current funds may run out in weeks, needs $1.29 billion to overhaul its business, Reuters reported on Tuesday.
Scania, controlled by Volkswagen’s commercial vehicles arm Traton Group, depends on Northvolt for battery cells for its e-trucks and owns a stake in the Swedish green tech player. It pledged Northvolt $100 million as part of the U.S. bankruptcy deal.
Volkswagen is Northvolt’s top investor with a 21% stake.
Contacted by Reuters with its findings, Northvolt said it is common practice for a carmaker to be involved in a supplier’s production, adding it was particularly thankful for its trusted partnership with Scania.
Audi and Porsche, which are also Northvolt’s customers, have occasionally visited the factory, but the consistent presence of Scania staff was unusual, according to two long-time employees.
The two carmakers did not immediately reply to a request for comment.
Under the support plan, Scania staff were due to attend regular meetings with Northvolt’s management and other employees to deliver updates and suggest improvement initiatives.
A collapse of Northvolt, which could come soon without additional funds, may leave Scania without immediate EV battery options, even though it has been in talks with other suppliers.
It would also leave Europe reliant on dominant Chinese battery makers such as BYD and CATL.
QUALITY PUSH
Scania’s electrification plans have been hindered by Northvolt’s ramp-up issues. Last year, Reuters revealed the battery maker had missed in-house targets and struggled to boost production in the run up to Chapter 11.
Scania’s employees, which include quality and production personnel, were pulled in as part of a support project called “P.2 100k” that attempts to revamp an informal goal to produce at least 100,000 quality-grade battery cells each week, according to the internal company documents.
As a supplier, Northvolt must pass a quality check, known as “Production Part Approval Process”, to be able to deliver serial parts to Scania, according to the truckmaker’s supplier portal.
Improving quality is key to access much-needed funds.
Northvolt accessed $51 million of the Scania loan in November. A tranche of $25 million was set to be paid on Jan. 12 and another of $24 million on Feb. 2, provided the group met certain quality and production targets, bankruptcy court documents dated Dec. 20 show.
Both Swedish companies declined to comment on the funds.
Scania’s on-site support programme was set to end on Jan. 20, according to the Northvolt documents.
In a written statement to Reuters, Northvolt praised Scania as a “world-renowned role model for production efficiency”, and welcomed its collaboration since 2017.
“This has proven highly successful and contributed directly to improvements we are seeing at Northvolt Ett,” Northvolt said in the statement.
While Scania lacks extensive experience in battery production, its century-long business history, and expertise in establishing and scaling up factories across Europe is much-needed at Northvolt, industry sources say, offering hope to workers.
“We still have Scania helping us, they are not leaving us behind and they are trying to help us run a business the right way,” said Stenmark, the union representative.
($1 = 0.9617 euros)
(Reporting by Marie Mannes and Anousha Sakoui, Editing by Josephine Mason and Lisa Jucca)
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