Northvolt's bankruptcy: The end of Europe's electric dream?
It was Europe's flagship battery production. At least, it wanted to be. The Swedish company Northvolt was placed under bankruptcy protection. The dream thus becomes a nightmare.
Founded in 2015 by former Tesla executives and renamed Northvolt in 2017, the company wanted to produce batteries for electric cars in Sweden, as well as in Germany, Poland and Quebec. As such, the project obtained European subsidies and investments from major automakers, including BMW and Volvo. Goldman Sachs was also involved. However, despite a cell production start date of 2021, the plug has already been pulled for lack of liquidity, having raised over €13.9 billion in funds since 2016. On November 21, 2024, bankruptcy was declared. Northvolt AB was placed under the protection of Chapter 11 of the US Bankruptcy Code, by voluntary petitions for relief.
Why did this happen?
What precipitated Northvolt into this turmoil? First of all, there's a possible technological war. The main supplier of lithium-ion battery production machines, based in China, was (strangely?) unwilling to sell its machines to Northvolt! The Swedish company then had to fall back on another manufacturer, also Chinese. But with a lesser reputation. It didn't fail: their equipment didn't live up to expectations. The faulty equipment delayed the production process with too many defective batteries. Mass-producing such batteries is a complex business. In the beginning, there are always rejects, on the order of 30%. But it seems that at Northvolt, the level of failures was even higher.
Order cancellations
Delays have also tarnished Northvolt's reputation. BMW, for example, cancelled a major order in early 2024. The contract was worth €2 billion. More generally, as demand for electric cars declined, the battery market experienced a global slowdown. Other projects to build cells for electric cars in Europe have fallen behind schedule as a result. In addition, Northvolt had chosen to manufacture lithium-ion batteries using NMC (nickel-manganese-cobalt) chemistry. This technology is the most expensive. It's therefore not suitable for entry-level models. What a shame!
(MH with Olivier Duquesne - Sources: Caradisiac, Gocar, Wikipedia, Northvolt AB, agencies - Picture: © Northvolt)
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