Volvo Cars’ battery division, Novo Energy, announced on Monday that it will reduce its workforce by 50% in an effort to cut costs, following a strategic review influenced by the bankruptcy of its former partner, Sweden's Northvolt.

Novo Energy CEO Adrian Clarke stated, “Despite our efforts to safeguard the business and an ongoing search for a viable new technology partner, the current economic climate and market conditions have forced us to scale down our operations.”

Originally formed in 2021 as a joint venture between Northvolt and Volvo Cars, Novo Energy was tasked with establishing a dedicated battery factory in Gothenburg, Sweden. In January, the company had already started reducing its expenses, including laying off 30% of its employees.

Monday’s announcement revealed an additional 150 job cuts. A spokesperson confirmed the layoffs and reiterated that Novo Energy’s long-term goal remains to manufacture batteries with a new partner in the Gothenburg region.

Volvo Cars, which took full ownership of Novo Energy in February by acquiring Northvolt’s 50% share for a nominal amount, has supported Novo’s mission, though further details were not provided.

Despite the layoffs, Novo Energy will continue limited operations as it finishes the first phase of the factory’s construction, while exploring potential future opportunities to resume full-scale activities.

The bankruptcy of Northvolt in March and Volvo’s own recent struggles have cast uncertainty on the future of the battery initiative. CEO Hakan Samuelsson also acknowledged in April that while the factory’s physical construction is near completion, the necessary battery manufacturing equipment has yet to be installed. Samuelsson further emphasized the importance of finding a technology partner and suggested that the plant might eventually be shared with other brands under the Geely umbrella.