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European policymakers must face up to the costs of developing the region’s own battery industry to reduce its dependence on Asian suppliers, according to the boss of bankrupt Swedish group Northvolt.
Tom Johnstone, interim chair of the failed battery start-up, told the Financial Times that there needed to be the will and patience “to realise there’s going to be a huge amount of money to invest, there’s going to be some pain to go through”.
“There’s a cost to pay for it, but there can be a bigger cost to pay for not doing it,” he added.
Once Europe’s big hope in battery manufacturing, Northvolt filed for bankruptcy in Sweden on Wednesday, capping a nine-year journey. It raised more money — $15bn — than any other privately held European start-up from investors and governments but still failed to compete with the Chinese companies that dominate the battery industry.
The Swedish group, whose backers included Volkswagen, Goldman Sachs and BlackRock, had produced more than 1mn batteries in its factory just below the Arctic Circle but was still losing large amounts of money as it had yet to fully expand production.
Other European battery makers such as France’s Verkor and ACC or VW’s PowerCo are still years behind Northvolt.
Sweden’s centre-right government said it would try to help Northvolt find a new owner for the factory and a battery R&D centre near Stockholm.
However, critics among the start-up’s shareholders noted that neither Sweden nor the EU had provided the company with much financial support while China’s battery makers have benefited from substantial government subsidies for years.
“It is a strategic failure. Brussels has sat on the bench and been a witness to this but not done anything about it,” said one.
Julia Poliscanova, senior director at environmental campaign group Transport & Environment, said: “Northvolt was the closest to commercialisation in Europe. We don’t know if others will make it. If that happened in China, do you think the Chinese government would have let them fail?”
Johnstone himself said he hoped that Europe would “use the foundation” that Northvolt had provided to establish its own battery industry that could compete against Chinese, Japanese, and Korean players.
“The challenge is this is a very advanced technology, with very advanced manufacturing techniques. It takes a huge amount of money to do it, it takes time to get there. This is a marathon, not a sprint. But I do believe it’s important to have a European position in such a core technology to live alongside the Asian position,” said Johnstone.
One European battery executive added that public money was needed to establish the industry: “You will not reach this goal of having a European battery sector if you let private investors purely take financial decisions not based on political goals.”
Another warned that “there will be more doubt among investors” supporting companies in Europe after Northvolt’s bankruptcy.
With Europe focusing on rearmament amid Russia’s war on Ukraine and worries about the US commitment to the continent, some sector executives worry that there could be a temptation to turn more to China to help with the green transition.
CATL, the Chinese company that is the world’s largest battery maker, already has plans for factories in Germany, Hungary, and Spain. “The easy answer is to become dependent on China,” said one automotive executive.
Johnstone acknowledged the need for increased defence spending but said that backing the green transition did not need to be “mutually exclusive”. He added: “Investing in manufacturing and technology in Europe is critical.”
Last week, the European Commission unveiled plans to improve support to battery makers by simplifying state aid rules. With some battery executives calling for Brussels to enforce technology transfer agreements, it also announced rules making support for non-European companies contingent on sharing technology and skills with European groups.
A Commission spokesperson said it could not comment on Northvolt’s commercial decision, but said: “The Commission fully stands by our ambitions for the European battery industry. We remain committed to supporting the battery sector, which is at the core of our decarbonisation objective.”
Brussels’ “Battery Booster” plan will support the production of battery cells and components through direct funding and non-price criteria for components. There will also be €1.8bn in the next two years in financing for battery makers. They can also access up to €100bn for clean industries announced last month, the spokesperson said.
