Europe’s ambitions to lead in green technologies are facing serious challenges as Northvolt AB, once considered a potential rival to China’s battery giants, battles to survive. The Swedish company’s high-growth strategy, aimed at competing with the likes of CATL and BYD, has unraveled due to operational blunders, debt, and quality issues. After accumulating $55 billion in contracts from major automakers, Northvolt expanded rapidly, announcing new factories in Germany and Canada before even completing commercial production at its Swedish site. However, production setbacks, high costs, and machinery failures, along with BMW canceling a major order due to quality problems, have put the company in crisis.
Northvolt’s decision to scale up in a wide range of battery technologies, from EV power cells to lithium-metal batteries for aircraft, added layers of complexity that it struggled to manage. Quality issues resulted in faulty cells, while delays in delivering to Volkswagen’s Scania unit further dented confidence. Health and safety concerns, including toxic chemical leaks, also compounded the company’s woes.
Globally, overcapacity in the battery sector has driven down prices, favoring Chinese suppliers with lower costs. Chief Executive Peter Carlsson pointed to industry-wide challenges, as $1.1 trillion in investments in battery production have outstripped demand, creating a period of low prices and increased competition. Northvolt is crucial to the EU’s Net Zero Industry Act, which aims to boost European battery production, but its failure would be a major setback for the region’s green tech ambitions.
