- Sweden’s ambitions to have a strong electric vehicle (EV) battery industry are overshadowed by the financial collapse of battery maker Northvolt.
- Most importantly, the crisis brings to light the challenge of industrialising battery production, a highly technical process, and raises doubts about Europe’s ability to compete.
Sweden’s ambitions to have a strong electric vehicle (EV) battery industry are overshadowed by the financial collapse of battery maker Northvolt. Last month, Northvolt summarily rejected the headhunter’s scheme and filed for Chapter 11 bankruptcy protection in the United States following failure to attract new funding from investors, including Volkswagen and Goldman Sachs.
The collapse of Northvolt highlights the difficulties European battery startups will face struggling with Chinese manufacturers that produce 85 per cent of battery cell output worldwide, according to the International Energy Agency.
Since 2016, the company, which has a motto of “make oil history,” was able to raise over USD 10 billion. Northvolt managed to produce and sell batteries but failed to scale up production and manufacture high quality materials in high volumes, despite shrinking its operations and cutting jobs in the recent months.
In June, BMW scrapped a contract worth 2 billion euros (USD 2.1 billion) because of supply problems, which represented a major blow. Troubles for Europe’s wider EV ambitions: Northvolt now wants USD 1 – USD 1.2 billion to restructure by March 2024.
But European automakers have invested billions in turning away from internal combustion engines to EVs, and demand hasn’t risen as quickly as hoped. “The root cause is that they simply cannot meet customer supply demand,” said Andy Palmer, founder of Palmer Automotive, using the term a ‘management issue.’ “We are, also, ten years behind the West in batteries,” he added, “the Chinese are technologically 10 years ahead.” That’s a fact.”
Most importantly, the crisis brings to light the challenge of industrialising battery production, a highly technical process, and raises doubts about Europe’s ability to compete. This year, at least eight EV battery projects in Europe have been delayed or abandoned, including China’s Svolt and Stellantis-led joint venture ACC.
Benchmark Minerals reports that Europe’s projected battery capacity for 2030 has dropped by 176 gigawatt-hours in 2024—a loss nearly equivalent to the continent’s current installed capacity. As European startups falter, the gap between Europe and its Chinese rivals continues to widen, jeopardising the continent’s EV future.