• European battery firm Northvolt said on Monday it would lay off 1,600 workers.
• The startup, founded by two former Tesla execs, builds batteries for electric vehicles.
• Northvolt has struggled financially, with BMW pulling out of a $2.1 billion order in June.

A European battery startup founded by two former Tesla executives is cutting a fifth of its workforce amid a darkening outlook for electric vehicles.

Swedish battery maker Northvolt announced on Monday it would lay off 1,600 employees and scale back on expansion plans, citing efforts to prioritize its existing customers.

Peter Carlsson, CEO and cofounder, said in a press release that the company needed to make “tough” decisions to respond to “headwinds in the automotive market, and wider industrial climate. We now need to focus all energy and investments into our core business.”

The company was founded in 2016 by Carlsson and Paolo Cerutti and has been backed by investors including Goldman Sachs, Baillie Gifford, and Spotify cofounder Daniel Ek. It aimed to revolutionize battery manufacturing but has struggled in recent months.

BMW pulled out of a $2.1 billion order for battery cells for its EVs in June, outlets including Reuters reported.

Northvolt has also faced a series of deaths among workers at one of its factories near the Arctic Circle in northern Sweden.

In late 2023 the company asked investment banks to pitch for roles in a listing as soon as this year that could have valued Northvolt at about $20 billion. It’s unclear when, or even if, the company will go public.

EV companies have slashed jobs over the past year as demand for electric vehicles has slowed. Tesla laid off more than 10% of its global workforce in April, and rivals Rivian and Lucid have also cut workers.

Northvolt did not immediately respond to a request for comment from Business Insider.