Swedish battery developer Northvolt has announced it is cutting 1,600 jobs as it struggles with a tumultuous market for automotives.

The firm, which specialises in building lithium-ion technology for electric vehicles (EVs), was founded in 2015 by former Tesla executives and is seen as one of Europe’s primary competitors to China in the battery manufacturing space. China currently dominates the rest of the world in the race for the most EV battery manufacturing, with nearly 66% of global capacity.

Its Northvolt Ett factory, which is located in Skellefteå, northern Sweden, is Europe’s first homegrown gigafactory dedicated to producing lithium-ion batteries.

But following a strategic review, the firm said it had “revised the scope” of its operations to focus on accelerating production of large-scale cell manufacturing, resulting in the round of lay-offs.

European demand for EVs has dampened in recent months, leading to recent calls from car makers for a relaxation of emission rules from the...