(Bloomberg) -- Sweden’s Northvolt AB will shed 20% of its global workforce and pause its expansion plans to slow cash outflows as the battery-making firm confronts a burgeoning financial squeeze.

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The company, which has struggled in its mission to stand up a home-grown supply of electric-vehicle batteries in Europe, said it will reduce its Swedish workforce by 1,600 positions as part of a strategic review that was announced this month.

The money-saving move comes as Northvolt continues to negotiate a new financing pact with its creditors and investors. The company in January reached agreement on a $5 billion green loan facility, taking its overall debt and equity commitments to more than $13 billion. Lenders have selected investment bank PJT Partners to help advise on options, Bloomberg News reported last week.

The manufacturer’s rapidly mounting challenges have placed at risk Europe’s ambition to build an EV battery-making champion. The company, which earlier this year was contemplating an initial public offering, has come under increasing strain as a production ramp-up faltered, EV demand slowed and battery-cell competition from China intensified.

Northvolt has also faced a string of health and safety concerns ranging from worker deaths and injuries to reports of toxic chemical leaks. Local business daily Dagens Industri reported this month that the company was looking to raise 7.5 billion kronor ($737 million) to make September’s payroll.

The company said Monday it was paring back other plans to focus on raising production at its main plant in Skelleftea, in northern Sweden. Higher battery-cell output would help generate much-needed revenue, a goal that’s so far proven elusive. BMW AG backed out of a €2 billion ($2.1 billion) order in June after experiencing quality issues, while lead investor Volkswagen AG’s Scania trucks has complained of slow deliveries.

Volkswagen, owner of an about 20% stake in Northvolt, on Monday reiterated its support for ramping up the company’s existing production lines. It declined to comment on any financial investments. BMW said it hadn’t changed its investment in the battery maker, which stood at 2.8% at the end of 2023, and had no plans to do so. A spokesman declined to comment on whether it would take part in any further investment rounds to maintain its ownership level.