Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Sweden’s government has ruled out a financial rescue of Northvolt as the country’s green battery start-up fights for survival.
Ulf Kristersson, the centre-right prime minister, said on Monday that Sweden wanted to position itself as a leading country for the green transition with new companies such as Northvolt and H2 Green Steel supplying established groups such as Volvo Cars and Atlas Copco.
But he added: “There is no question of the Swedish state going in and becoming a shareholder. Right now, the ball is in the court of Northvolt’s shareholders.”
The Swedish battery group is Europe’s great hope of fighting back against the likes of CATL and BYD of China, Panasonic of Japan, and Tesla of the US in leading the battery sector.
Despite becoming the first company in Europe to produce a cell from a homegrown gigafactory in late 2021 at its factory in Skellefteå just below the Arctic Circle, Northvolt has grappled with scaling up its production.
The lossmaking group is desperately seeking to raise fresh capital as it focuses on its first gigafactory. It will cut jobs, close down part of the Skellefteå factory and examine delays for three other planned plants in Sweden, Germany and Canada.
But after raising more than $15bn since its launch in 2017 — the most of any privately owned start-up in Europe — Northvolt is struggling to gain backing for its latest fundraising amid concerns about the outlook for electric vehicles and intensifying worries about the company’s own financial position.
Carmakers including Northvolt’s biggest shareholder Volkswagen and Volvo Cars have sounded the alarm about the slow pace of electric car sales. BMW, one of Northvolt’s earliest backers, cancelled a $2bn contract with Northvolt earlier this year in frustration at delayed deliveries.
Northvolt executives have argued that the company had enjoyed relatively little government support from Sweden, unlike the generous backing from Germany and Canada, with much of it coming in the form of loan guarantees. “It’s not like we’re dependent on a vast amount of subsidies from Sweden,” said one.
The Swedish prime minister made his comments on Monday in response to a question about whether the government would help rescue Northvolt. Kristersson said: “We don’t involve ourselves in the business plans of individual companies but we do want to be a good place for this kind of industry.”
Northern Sweden has become a hub for the green transition thanks to the abundance of renewable electricity there, largely trapped due to poor transmission links to the south of the country. But critics have questioned the risky nature of Northvolt and other ventures there, requiring huge amounts of capital while demand has been shaky.
Peter Carlsson, Northvolt’s chief executive, has in turn cast his company’s plight as central to Europe’s manufacturing future and ability to take on China and the US in the green industry. A person close to the company said: “If Europe wants to avoid becoming a museum, it needs to stand up for industries and companies like this.”
Freyr, a battery maker headquartered in neighbouring Norway, has mothballed its plant there and is instead prioritising plans in the US, where it should receive generous subsidies courtesy of President Joe Biden’s Inflation Reduction Act.
