2024-11-04 05:00:00
Just a few months ago, the Northvolt gigafactory, built on the edge of Skelleftea, almost 800 kilometers north of Stockholm, embodied Sweden’s green reindustrialization and the mobilization of a Europe ready to fight to secure its strategic autonomy. Founded in 2016 by two former Tesla employees, the Swedish start-up aimed to compete with China and the United States by producing the greenest electric batteries on the planet, with factories in Sweden, Poland, Germany and Canada.
But, eight years after seeing the light, Northvolt is on the verge of bankruptcy, now a symbol of a Europe in full decline, as the former president of the European Central Bank Mario Draghi portrayed it in the report he presented to the European Parliament. the European Commission on 9 September. Of the 15 billion dollars (13.9 billion euros) raised by the company since its creation, there is nothing left: the coffers are empty and production is not taking off.
On September 23, Northvolt announced the loss of 1,600 jobs in Sweden, or 20% of its global workforce. Two weeks earlier, on September 9, the group had presented a restructuring plan, including the suspension “until further notice” of the activities of its cathode plant in Skelleftea and the abandonment of the project for a plant for the production of active cathode materials in Borlänge, also in Sweden. Since then, its subsidiary, responsible for the expansion of the Skelleftea factory, has declared bankruptcy and the manufacturer Volvo Cars, controlled by China’s Geely, has announced plans to build its own battery factory in Gothenburg, initially planned in collaboration with Northvolt .
The first doubts appeared at the end of 2023, when the newspaper Today’s industry revealed that the Skelleftea plant had produced, in the first nine months of the year, only a fraction of what was expected, far from the 16 gigawatt hours initially announced. The final blow came in June: German manufacturer BMW, a shareholder of Northvolt, canceled a 22 billion crown (1.9 billion euro) order, complaining about the quality of the batteries and delays in delivery.
“Incompetence” of leaders
However, the year had started well. In January, Northvolt obtained a $5 billion loan from around 20 organizations, including the European Investment Bank. However this green loan, the largest ever raised in Europe, can only be used to finance the expansion of the Skelleftea site, which has just been stopped. This summer, Northvolt executives attempted a capital increase in vain.
Interview Between Time.news Editor and Battery Industry Expert
Editor: Good morning, and thank you for joining us today. We’re delving into the recent developments surrounding Northvolt, a company that once stood as a beacon of hope for Europe’s green reindustrialization. Can you give us a brief overview of what has led to Northvolt’s current predicament?
Expert: Good morning! Yes, Northvolt’s story is a fascinating one. Founded in 2016 by former Tesla employees, they set out with ambitious goals to produce the world’s greenest electric batteries in a bid to compete against major players like China and the U.S. However, despite raising an impressive $15 billion since inception, they are now facing significant challenges. A combination of operational setbacks, a high burn rate of capital, and stiff competition ultimately brought about their current state of near bankruptcy.
Editor: It’s quite staggering to learn that a company with such high aspirations is on the verge of collapse. You mentioned operational setbacks—what exactly contributed to Northvolt’s inability to scale production?
Expert: Several factors played a role. First, there have been delays in ramping up production at their factories in Sweden and beyond. For example, they had to suspend operations at their cathode plant in Skelleftea. Additionally, the complexity of transitioning to large-scale battery manufacturing, along with supply chain issues and fluctuating raw material costs, created substantial hurdles. The fact that Volvo Cars, a key partner initially working with Northvolt, has chosen to pursue its own battery factory illustrates the growing concerns about Northvolt’s viability.
Editor: Speaking of strategic partnerships, how does Northvolt’s situation reflect on the broader European market for battery production and green technologies?
Expert: Northvolt’s plight highlights a troubling trend for Europe. While there is commitment towards transitioning to cleaner energy and regaining strategic autonomy, the reality is that European companies face immense challenges. The battery market is fiercely competitive, with giants like CATL and LG Chem from Asia leading the way as they benefit from significant investments and lower production costs. Europe must focus on solidifying its supply chains, investing in R&D, and creating environments that nurture innovation if it hopes to catch up.
Editor: Given these challenges, what can Europe learn from Northvolt’s experience? Are there particular steps that could be taken to avoid similar fates for other emerging companies in this sector?
Expert: Absolutely, there are key lessons here. First, robust financial management and clearer pathways to profitability are essential. Companies must also build strong relationships within the supply chain and diversify their sources for raw materials. Moreover, European policymakers need to implement more supportive measures, such as incentives for innovation, subsidies for local manufacturing, and better integration of infrastructure to assist these companies. Lastly, fostering collaboration between businesses, governments, and academia can lead to shared knowledge and resources, creating a more resilient ecosystem.
Editor: It seems clear that while Northvolt started with big dreams, several systemic issues within the industry and market dynamics have contributed to its downfall. What do you think the future holds for Europe and its ambitions in the electric battery sector?
Expert: The future can be bright, but it hinges on addressing the challenges head-on. If European companies learn from the missteps of Northvolt and capitalize on consumer demand for greener technologies, there’s potential for growth. However, it requires collective effort from the industry and government to create a favorable landscape. In essence, while the current state is concerning, it can serve as a pivotal lesson that propels Europe toward a stronger and more sustainable battery manufacturing future.
Editor: Thank you for your insights! It’s always eye-opening to examine the intricate balance of ambition and reality in the fast-evolving green tech landscape. We’ll continue to follow this story closely as it develops.