Immediately below the Arctic circle, the flagship battery factory from Northvolt once stood as a beacon of Europe’s ambitions to supply its future with clean energy. But according to the recent of the company bankruptcyits last lines of production silent.
There is still hope that a buyer could appear to revive The fortune of the small Swedish factory city Depending on the success of Northvolt. Silicon Valley Startup Lyten already has Roof over Northvolts Polish workand Swedish truck manufacturer Scania has expressed interest When compiling a consortium to acquire its F&E facility.
However, one thing is certain: Neither the European Union nor Sweden will save Northvolt, although it was once Europe’s best financed startup after receiving 15 billion US dollars in financing obligations from investors and governments.
As a company founded by two former Tesla managers, despite such a massive capital for business schools in the coming years. It also raises questions whether the government has done enough to support its former battery champion and how Europe should revise its approach to the competition with China in growth-strong, low-carbon industries.
What went wrong?
While Canada and Germany delivered both considerable support and grants to the Swedish company, his home country largely contained understandably Increase criticism of shareholders and former managers. After all, the dominant Chinese industry has long benefited from state aid, which has contributed to reaching maturity in order to reduce the cost of unit 30% lower than batteries produced in Europe.
However, it is anything but clear whether more financial support would have made a decisive difference, since Northvolt was already financed so well. According to Craig Douglas, a partner of the Climate Tech risk capital company World fundNorthvolt’s problems had more to do with the difficulty of catching up China, and the misconceptions that made it on the way.
“If you want to scale the new production skills in a commercial market, your executions have to be spectacular; it wasn’t Northvolts,” says Douglas. “They scaled and expanded geographically before they had a good grip on their actual production ability. They did not increase their earnings figures and their delivery times were delayed so that they could not be competitive.”
As a result, automotive customers losing trust. BMW delivered a big blow Cancellation of an order of 2.15 billion US dollars In the middle of delays. Scania had to secure Alternative supply For his electric fleet, when Northvolt tried to increase performance.
Even Volkswagenwho held a share of 21% in Northvolt, finally lost faith and took a big withedown for his investment in 2024 to advance with its own subsidiary, Powerco– A step that underlines the continued demand for local batteries.
Northvolt co -founder Peter Carlsson, Peter Carlsson, said as CEO as CEO, to apply for bankruptcy capital in the United States, although the company’s challenges were diverse take responsibility Because the fact had ended up in this situation.
A make-or break moment for the EV sector in Europe
Northvolt’s failure is undoubtedly a blow to the wider ecosystem. For Douglas it will “annoy many of the larger investors in terms of future scales, and the stakeholders will concentrate much more on the scaling risks than before.”
“If you want to scale new production functions in a commercial market, your executions must be spectacular; Northvolts were not.”Craig Douglas, partner of the climate tech risk capital company World fund
However, it is important to remember that Northvolt was not the only scale-up in the race. “It’s not because of it Recently. His startup, Annoyingis supported by Renaultand secured 2.15 billion US dollars Build an EV gigafactory in Dunkirk.
Once presented as a French Northvolt, Verben has moved slowly than the former peer. Although its pilot line in Grenoble is the production of cell-and-basic units, which are energy in a battery, the production in Dunkirk Has not started yet.
This means that Verkor is still in a critical transition phase, but can at least count on a little help from Brussels.
The European Commission recently announced that it will distribute grants of around 1 billion US dollars to six EV battery projectsHow it tries to participate in the competitive area and to support the transition from Europe to a clean, competitive and resilient industrial basis. This includes Verben, but also Novo Energy, a former joint venture between Northvolt and Volvo cars, the latter of which recently TOok full possession; Cellforce, in possession of Porsche; and acc, supported by Sternantis And Mercedes Benz.
“It is not because some like Northvolt had problems that it is the end of the game. Europe has to continue to push.”Benoit Lemaignan, French entrepreneur, Annoying
“There are enough examples in history that show that it is rarely too late to catch up First momentum capital. For him, this would have to require a strong investment in the entire European EV industry without trying to select a “extraction company”.
Protectionism, specialization and long -term courage
It is a view that is shared by the International Energy Agency (IEA) that states that we are in a “make or break” moment for the European battery industry. Although China-DAS has extensive integration of manufacturing knowledge and supply chain integration, produces three quarters of batteries worldwide, there are ways to set up a more competitive battery industry in Europe that goes beyond the flat subsidy.
“Everyone begins with the guarantee of strong domestic demand that gives manufacturers time to improve production processes and to develop strong regional industrial ecosystems. At this front, it is clear that further growth of demand is signaled and the investment risks are reduced”, the IEA is of essential importance ” wrote At the beginning of this year.
Fischer adds that the political support for the European battery industry also has to either include loosing regulations or the use of protectionist guidelines such as the Mechanism of the carbon edge adjustmentAn EU system for confirmation that a price for the carbon was paid, which was emitted during the production of certain imported goods that apply completely from 2026.
Douglas agrees: “Things like the CBAM or local content requirements could help create a flat competitive area with a clearer value that is for a local. droppedEspecially in China; and NMC (Nickel -Mangan cobalt oxide) in which Korea and Japan have developed Strong expertise.
Instead, Douglas believes that Europe has a better chance of high-end cells and new cell chemistry. He also points to other related industries in which the price gap with China is either less or less important: “Decarbonized industrial production, recycling and circularity, biotech and agritech as well as energy business innovations have large starts in Europe.”
Nevertheless, the collapse of Northvolt, which are exposed to scaling deficiencies, which must be tackled if Europe wants to build the supply chains, which are decisive for its sovereignty, in EV batteries and beyond.
One of them according to Dr. Herbert Mangesiu, a general partner in the early phase Deep Tech VC company VsquaredIt is that western VC ecosystems should appreciate better how difficult it is to build economically viable production systems on the scope and sophistication of the Chinese. “It is crucial to have engraved adequate risk management and monitoring into governance structures, that is, the ability to assess progress compared to the budgets,” he warns.
At the system level, cheap energy and a qualified workforce are also a necessary “baseline” for competitiveness, adds Malsiu. The reaching of this time can take time, but it is a lesson that the Chinese have built up their own flowering industries. Mangeiu: “China shows a consistency in the industry guidelines that enables reliable and competitive ecosystems to build up, especially in Cleanetech sectors.”
