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And so farewell to Northvolt. The European battery maker’s bankruptcy filing in Sweden has dealt a heavy blow to the continent’s hopes of developing a homegrown electric vehicle battery maker able to even denting the market dominance of Asian rivals, akin to China’s CATL. The lesson, for Europe, must be to back those green technologies where it already has a bonus.
The events of this week have a way of inevitability. What was once Europe’s best-funded start-up had already filed for Chapter 11 bankruptcy within the US last 12 months. Northvolt had been hoping to secure $1bn to maintain its only existing plant running, in Skellefteå in its home country of Sweden. That seemed a tall order. A court-appointed trustee will now sell its assets.
Northvolt will not be the one battery maker in Europe, or elsewhere, that has failed, after all. The UK’s great battery hope, Britishvolt, was one other high profile casualty in 2023. Battery manufacturing is a highly capital intensive, highly technical industry. Recent weaker-than-expected EV sales have also made investors jittery concerning the market’s prospects. A slew of individual projects have consequently been cancelled or delayed.
The EV battery market will not be the one green industry where Europe has struggled to compete against the might of China. Just witness the plight of Europe’s solar cell manufacturers.
But Northvolt’s struggles have also been homegrown. Yes, it had raised around $15bn in equity, debt and government funding since its inception in 2016. But ultimately this proved no match for its overblown ambition. It not only wanted to supply EV batteries, however the cathodes that go into batteries and energy storage. It was also involved in battery recycling.
Northvolt’s bankruptcy raises a legitimate query over whether Europe can still — or should even attempt to — create a domestic battery champion. Chinese and Korean players dominate nearly 99 per cent of automotive battery sales within the EU, on International Energy Agency numbers.
This will not be the top, though. There are still nine domestic firms in the combination, in keeping with CRU Group. These include starts-up akin to France’s Verkor. Others are owned by European carmakers — Volkswagen’s PowerCo for example. Many could still carve out a distinct segment for themselves out there by aiming small in the primary place and scaling up. Partnering with Chinese or Korean battery makers is one other route.
However the greater lesson from Northvolt for European policymakers could be back those green industries where Europe will not be ranging from scratch. Take the still nascent sector of small modular reactors. Here the UK and Europe have already got homegrown nuclear champions. That’s no less than one area where there may be a battle still to win.
nathalie.thomas@ft.com
