Norsk Hydro is no longer investing in its battery and green hydrogen businesses and will phase out these operations in the coming years, the Norwegian aluminum producer said on Wednesday.
It became the latest European firm to pare back activities in clean energy sources such as green hydrogen in a difficult economic environment.
“Battery materials and green hydrogen will no longer be strategic growth areas for Hydro and no further capital will be allocated,” Hydro said in a statement ahead of its investor day.
It does not expect to go back to investing in these fields in the future, CEO Eivind Kallevik told Reuters, instead focusing on its aluminum recycling and extrusion activities.
He did not provide more specific reasons behind the decision.
The hydrogen sector, a key building block in the European Union’s shift towards cleaner energy, has struggled with limited subsidies, fears of oversupply and increasing competition from cheaper non-EU imports, especially from China.
Hydro’s European aluminum volumes have also fallen, hit by lower electric vehicle production stemming from Germany’s unexpected termination of EV subsidies and the looming EU tariffs on China-made imports.
“It’s hard to see Chinese EVs leaving Europe with a 30-35 per cent market share. That’s probably going to stay,” Kallevik said during a Capital Markets Day presentation.
He added Hydro was mainly exposed to larger, premium car brands that use more aluminum per vehicle than smaller or mid-sized brands.
Hydro said it was launching a cost-cutting program with targeted savings of 6.5 billion Norwegian crowns ($582-million) by 2030, aimed at strengthening the recycling and extrusions operations.
Green aluminum, which is at the heart of Hydro’s growth strategy, is primarily made using recycled aluminum.
The company also said it would continue to support battery recycler Hydrovolt as an industrial owner in close link with its recycling business and strategic partners.
It last month said it was now the sole financier of the joint venture established with Sweden’s Northvolt in 2020.
Northvolt, once hailed as Europe’s best shot at a home-grown EV battery champion, filed for U.S. Chapter 11 bankruptcy protection last week after talks with investors and creditors for funding failed.