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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 capable of even denting the market dominance of Asian rivals, such as China’s CATL. The lesson, for Europe, should be to back those green technologies where it already has an advantage.
The events of this week have a sense of inevitability. What was once Europe’s best-funded start-up had already filed for Chapter 11 bankruptcy in the US last year. Northvolt had been hoping to secure $1bn to keep 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 is not the only battery maker in Europe, or elsewhere, that has failed, of course. The UK’s great battery hope, Britishvolt, was another 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 about the market’s prospects. A slew of individual projects have consequently been cancelled or delayed.
The EV battery market is not the only 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 produce EV batteries, but the cathodes that go into batteries and energy storage. It was also involved in battery recycling.
Northvolt’s bankruptcy raises a legitimate question over whether Europe can still — or should even try to — create a domestic battery champion. Chinese and Korean players dominate nearly 99 per cent of car battery sales in the EU, on International Energy Agency numbers.
This is not the end, though. There are still nine domestic companies in the mix, according to CRU Group. These include starts-up such as France’s Verkor. Others are owned by European carmakers — Volkswagen’s PowerCo for instance. Many could still carve out a niche for themselves in the market by aiming small in the first place and scaling up. Partnering with Chinese or Korean battery makers is another route.
But the greater lesson from Northvolt for European policymakers might be back those green industries where Europe is not starting from scratch. Take the still nascent sector of small modular reactors. Here the UK and Europe already have homegrown nuclear champions. That is at least one area where there is a battle still to win.
nathalie.thomas@ft.com
