Northvolt has become a recurrent figure in the narrative surrounding Europe’s battery ambitions. Once heralded as a symbol of the regions push for self-reliance in battery production, its trajectory has taken a turn. Most recently, Northvolt filed for bankruptcy in the US, and its CEO stepped down. How did a company once seen as Europe’s battery hopeful arrive in this position? More importantly, what insights can we learn from this story?

The Journey of Northvolt

Founded by former Tesla executives Peter Carlson and Paolo Cerruti in 2016, the company was created to develop sustainable, Europe-based battery manufacturing. The company soon received backing from players such as Volkswagen, Golman Sachs and BMW among many others, raising over USD15 billion. Plans for a production hub in Sweden were followed by ambitious proposals to expand into Germany, Poland, and North America.

At its peak, Northvolt secured more than USD50 billion in future contract commitments. By 2024, it expected to produce at least 30GWh of battery cells annually at its flagship facility, Northvolt Ett, located in Skellefteå, Sweden. In early 2024, the company announced Europe’s largest-ever green loan of USD5 billion for a facility in Heide Germany, reflecting the market’s confidence in its vision. In addition to this it also showcased promising advancements in sodium-ion battery technology.

However, 2024 proved to be a turning point for the company.

Northvolt’s Decline

By the close of 2023, Northvolt had produced just 80MWh of cells, 0.05% of its 16GWh projected capacity. In June 2024, the company suffered a significant setback when BMW terminated a multi-billion-dollar contract for prismatic cells, citing delays and subpar quality. The loss of this agreement marked a critical blow, with BMW shifting its supply chain to Samsung SDI instead.

Financial troubles came into sharper focus. Northvolt reported a USD1.2 billion loss for 2023, a fourfold increase from 2022, and continued to haemorrhage money throughout 2024. With its revenue streams narrowing, Northvolt scaled back its expansion plans. By September, it had laid off 20% of its workforce and pivoted to concentrate solely on cell manufacturing.

More recently, this spiral has accelerated. Two subsidiaries Northvolt Ett Expansion AB and its US operations, filed for bankruptcy, the company announced the closure of its energy storage division, and CEO Peter Carlsson stepped down.

Lessons from Northvolt

Northvolt’s story offers three key lessons.

  1. Europe has a strong appetite for domestically made cells made by domestic players.

        Northvolt’s ability to secure USD50 billion in supply contracts highlights the high demand for European-made batteries. However, the gap between ambition and execution remains significant. Production delays and quality issues emphasise the importance of time-to-market and consistent standards.

        Eyes now look to other European battery players, such as Morrow, Verkor, or ACC, who are beginning to ramp up production, but not as quickly as Northvolt had planned.

        2. Asian players will remain important in Europe’s battery market

        BMW’s pivot to Samsung SDI underscores Europe’s reliance on established Asian battery manufacturers. While European firms remain in the megawatt-scale production phase, players from China and South Korea, such as CATL, SK Innovation, and Samsung SDI, dominate at the gigawatt level.

        This reliance is unlikely to wane. According to Benchmark’s Gigafactory Assessment, Chinese firms will own 30% of Europe’s production capacity by 2030, with South Korean players also controlling a substantial share. Asia’s dominance will continue.

        3. EU regulation is both an opportunity and a challenge

        The EU’s stringent battery regulations aim to build a robust domestic industry by enforcing standards on carbon footprints, raw material traceability, recycling, and permitting. While these measures are designed to foster sustainable growth, compliance costs and hurdles can slow expansion efforts.

        European manufacturers face the additional challenge of remaining competitive in R&D, particularly as the industry evolves rapidly. Consequently, many players have turned to licencing Chinese technology or signing joint ventures to meet market demands. Without sustained innovation, European players risk falling behind in quality and performance.

        While Northvolt’s story is not yet over, its position in the European market has certainly changed.

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        Image Credit: Northvolt