BONUS PODCAST: How Northvolt Collapsed And What It Means For EVs
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Northvolt was once Europe's most promising battery manufacturer and brightest hope for challenging the Asian dominance in the EV battery sector. It filed for bankruptcy in Sweden on March the 12th yesterday, following months of financial struggle. The Swedish battery maker had previously sought Chapter 11 bankruptcy protection in the United States back in November 2024.

But ultimately failed to secure the necessary funding to continue operations. Despite raising over $10 billion in capital since 2016 and securing contracts with major automakers, Northvolt succumbed to a combination of production challenges, market pressures, strategic missteps and intensifying competition from Asian manufacturers.

The bankruptcy represents not just the failure of a single company, but potentially a setback for Europe's ambitions to establish major manufacturing independence and accelerate its own transition to electric mobility. Welcome back to a special bonus edition of the podcast. I'm Martin Lee, as today we look at the collapse of Northvolt, Europe's battery champion, and what it means for the industry. Let's get into it.

Well, founded in 2016 by former Tesla executive Peter Carlson and Paolo Cerruti, Northvolt emerged with ambitious goals to make oil history and establish Europe as a competitive force in the global battery industry. The company quickly gained attention as Europe's best hope for reducing dependency on Asian battery manufacturers, particularly those from China.

Based in Sweden, Northvolt's vision was to create a sustainable, vertically integrated battery production ecosystem powered entirely by renewables. The

The company's trajectory appeared promising in its early years. It established its flagship manufacturing facility in northern Sweden, in Skellefteå, with plans to produce enough batteries annually for more than a million vehicles. This ambitious project attracted serious investment, raising well over $10 billion through equity, debt and public funding. Volkswagen Group, Goldman Sachs, BlackRock, even the Spotify co-founder Daniel Ek.

However, the warning signs began to appear in 2022 when the company experienced production delays. By 2023, Northvolt's losses had ballooned to $113 million. Sorry, had ballooned from $113 to $950 million. Despite securing a $5 billion green loan in early 2024 for plant expansion, this funding was later cancelled as the company's problems mounted.

Back in June 2024, BMW dealt a severe blow to Northvolt by cancelling a $2 billion purchase agreement after they'd failed to meet the supply commitments from a contract dating back to 2020. The situation deteriorated further last September when Northvolt announced the dismissal of 1,600 employees, 20% of its global workforce and cutting back on operations.

By November last year, with only $30 million in cash in the bank and reserves and debts of $5.8 billion, the company filed Chapter 11 bankruptcy protection in the U.S. Peter Carlson stepped down as CEO shortly afterwards, saying it's an unbelievably emotional day.

Despite efforts to restructure and secure new investments, Northvolt's debt had surpassed $8 billion across the entities involved in Chapter 11, forcing the company to file for bankruptcy in Sweden yesterday.

Tom Johnston, the interim chairman, announcing this was a decision we did not take lightly and added that despite exhaustive efforts, bankruptcy represented the only path forward for the stakeholders. So what went wrong and what does it mean for the EV industry?

Well, Northvolt's stakeholder landscape reflected the importance placed on the company by both the industry and the governments in Europe as well. Volkswagen Group emerged as a large shareholder, the largest, I believe, with a 21% stake or so. Having invested €1.4 billion since 2019, Goldman Sachs had about the same, I think about 19% holding through the investment bank reportedly planned to write off $900 million worth of

down to zero by the end of last year.

The Swedish government and European institutions were very supportive. They viewed it as essential to Europe's industrial sovereignty in the green transition. And the European Investment Bank was among the major backers providing significant funding. Key executives who shaped the journey, I've mentioned Peter Carlson bought the experience from Tesla and Paolo Cerruti stepped down as head of North American division back in January earlier this year. They also had

An experienced CFO and COO and the chief restructuring officer, also very experienced. So how many people are losing their jobs? Well, the bankruptcy will place 5,000 jobs at risk, most in Sweden. The impact extends beyond Northvolt itself to the broader community and...

The multiple failures behind the collapse are really interesting to look at. The Bangor Rupsee can't be sort of chalked off, if you like, to one single thing. It seems to me at least a culmination of many different challenges that kind of overwhelmed the company. And understanding them will be crucial for anybody who wants to do something similar and indeed for the European EV industry.

At the heart of the problem was the persistent inability to scale. The company's flagship plant, Northvolt's Et, was slated to achieve 16 gigawatt hours of production in 2021, but even by late 2024, they were barely making one gigawatt hour annually.

Now, internal documents revealed that Northvolt consistently missed the weekly production targets for deliverable cells, producing only 20,000 to 26,000 shippable cells a week by the middle of November last year. They had their path to 100K roadmap. That's 100,000 cells weekly, by the way. So you can see how far off they were on the quality. These shortfalls stemmed from multiple sources, machine faults,

Inexperienced staff were insiders described as overly ambitious goals. The technical complexity of cell making at scale proved more challenging than anticipated. Leader of the IF Metall Union, Marie Nielsen, said, and I quote, it's obvious that a lot has gone wrong and the price is now being paid by our members, end quote.

Well, let's have a look at the financial dimensions of Northvolt's failure. That's really significant, isn't it? Because despite raising well over $10 billion, I read $16 billion today as well as one of the numbers thrown out there, the company found themselves completely unable to secure the necessary financial conditions to build a business. This is, according to some,

The largest single European business failure, not just in the EV world, 10 to 16 billion, depending on which articles I was looking at this morning to research this piece.

And yet they still couldn't make it work. The financial strain was exacerbated by the company's timing relative to market conditions. There were rising capital costs, geopolitical instability, supply chain disruptions, and the European EV market has changed a lot over the years. The entire global EV market has changed dramatically.

a lot. Look back at the era of fundraising through the so-called SPACs, S-P-A-C, Special Purpose Acquisition Companies, reverse mergers, if you like. Companies have blown billions. Look at the likes of Fisker and Nikola. There was a gold rush as people tried to make a quick buck, and it just didn't work, did it?

Well, Peter Carlson, one of the things he said when he stepped down as CEO was, and I quote, what ultimately forced the board to take this decision was that it did not see a solution to the short-term liquidity need, end quote. But they had so much money. That's what I don't understand. They were blaming, well, we had a lack of liquidity. We didn't have the money to do it. They needed an extra $1.2 billion alone just to restore its business. And of course, they weren't able to secure that.

So was there an overreach? Why did it fail? Was it the market? What contributed? The company were aggressively vertically integrated, attempting to simultaneously develop battery cell production and cathode active material manufacturing.

and recycling operations, and advanced battery technologies such as lithium metal anodes. They were also working on sodium ion batteries. It was a broad focus, and that was what potentially diverted resources and attention from perfecting its core business.

As one analyst pointed out, the far-reaching vision of Northvolt was never going to work. The company was forced to scale back its operations after coming to that realisation, but only after it was too late. The company's ambition to challenge the Asian manufacturers, the Chinese CATLs and the BYDs that make it look easy, probably from a distance, was exceedingly difficult given the head start and scale advantages that some of the Chinese companies have got and also the advantages of having the support in China financially.

The competitive landscape was complicated by China's increasing battery production capacity. Very famously, China has an overcapacity in its cell production right now. They are able to make way more EV batteries than the world needs today in 2025. And that is driving down prices.

and put additional pressure on Northvolt's ability to establish themselves as a viable alternative to the Chinese names. As the bankruptcy proceedings began, it became clear that Northvolt had struggled with what some described as a highly complex battery industry, which they simply couldn't understand.

So what will be the impact on other EV makers in Europe, maybe the US and Asia as well, maybe the Korean names? What can we learn from it as well? Well, I'll tell you what, I've got some thoughts. If you're interested, stick around, I'll be back in a moment. All right, welcome back to the podcast. Hopefully you're loving these, or at least enjoying, or at least mildly enjoying these bonus episodes that I've been making. I love reading and writing about these things, and there's a few in the works which I've never actually got through to anyone.

fully forming into a podcast but it all forms part of the research that I do for the overall EV News Daily podcast the 20 minute news episode that sometimes is half an hour long but if you'd like to see more of these or perhaps different topics discussed and things like that when I've got the time I love doing this we're in a good period at the minute because both nursery and school are in and I get a full day of work at least nine till three

I've just head down working on EV News Daily before. Well, the kiddos go to bed in the evening and then I come outside and work again on these things. So, yeah, if you'd like to see more of these bonus shows, then I'd love to hear from you or any other topics. That would be fascinating to hear your feedback on. OK, let's get back to Northvolt. Well, the bankruptcy represents a big blow to Europe's ambitions to establish a domestic EV market for cell making. The company was widely seen as the best hope for challenging the Chinese battery makers.

The New York Times' Melissa Eddy saying the company, which a few years ago appeared to be Europe's best chance to compete against China rivals, has filed from Chapter 11 bankruptcy protection to attempt to buy it more time and raise more money. End quote. But do you think anyone is going to try and step in and do stuff? Well, there is a potential.

I'll get to that in a moment. The collapse leaves European automakers more dependent on Asia. European carmakers source their batteries mainly from the likes of South Korea's LG and Samsung, but also China's CATL as well, the world's largest EV battery producer. This dependency is obviously a strategic concern for some in Europe. Several major automakers also have batteries.

had supply agreements with Northvolt over the years. This bankrupt is forcing them to look at alternatives. It's not like you can just go out there and get a battery supply today. But as I mentioned, in China, there is an oversupply at the moment, which is driving prices down. And we do have global capacity if needed. So it might not be as simple as walking into a supermarket and picking something off the shelf. But it's not like whole new cell factories need to be built or

because we're no longer cell constrained. So Volkswagen was Northvolt's largest shareholder, but they were always cautious in their public statements, funnily enough. They always remained in contact with Northvolt and they haven't commented on the bankruptcy or anything like that.

And so beyond the immediate supply concerns, the German economy minister, Robert Habeck, expressing hope that Northvolt could be rescued by an investor who would secure the future, at least the plant in Germany. The talks are ongoing and the possibility exists, they say. However, the broader pattern of European battery initiatives facing delays or cancellations does raise doubts about that.

What can we learn? Well, Northvolt's failure offers several important lessons for the opposition, as it were, the other car makers. Firstly, it highlights how difficult it is, but they knew that already, particularly in regions without an established ecosystem of suppliers, technical expertise and manufacturing infrastructure. It remains a key for Europe to have a homegrown battery industry, but this is a marathon, not a sprint.

And it needs patience and long-term commitment, something which China hate to come back to it. But I've been telling you since 2018 on this podcast, China has been investing in this for decades. And you can't just do it overnight. The bankruptcy underscores the financial challenges in the battery industry as well. It's massively capitally intensive before you ever get to anything that looks like a profit.

And it demands extraordinarily patient investors. Or if you are in China, it requires a government that is behind the strategic plan and happy to put money into it because they see a future in owning the supply chain. And well, I can't say it's kind of working out OK for them. Northvolt's experience demonstrates the dangers of overreach as well by attempting to establish fully integrated battery supply chains.

and scaling production and developing the next generation technologies. I think they just spread themselves too thin. Future battery startups might learn from this by focusing on a narrow segment, stick to what you're good at. Is it solid state? Is it something else? Is it a new technology? Is it refining the current technologies to be better? For the broader EV industry, Northvolt's collapse...

certainly raises questions about supply chain resilience in certain regions. And in Europe here, there is obviously a dependency on Asian battery supplies at a crucial moment. 2025 is when so many car makers want to be spooling up their cheaper cars as well because they want to avoid those CO2 fines which are coming in, we think this year, maybe given a three-year runway to achieve. Those, obviously, VW cars,

deeply affected and achieving the goal of having European competent battery developers seems further away than ever.

So what can we learn? Well, the bankruptcy of Northvolt marks the end of this particular chapter in Europe's quest for battery independence. But look, this is certainly not the end of the story. As a court-appointed trustee now takes over the process of selling Northvolt's assets and its obligations, there is the possibility of the company's tech expertise and facilities coming under new ownership. Scania is one of those names. You'll know them from the trucking industry to...

raise their head and say, we're very interested. There is certainly a lot of interest in the technology which they have, which could be commercialized immediately, not necessarily the investment they made in the longer term next generation technologies. Sweden itself is going to have a massive loss to its industry and social economy.

and for the area as well of Skeletia and its employees that are going to be deeply affected potentially. And obviously our thoughts are with those.

For Europe's battery ambitions, it's a reality check. It's sobering, but it's certainly not the end of the story. As the EV transition continues to accelerate, Europe is going to have to, as a community, maybe it's the European Union itself, reassess the strategy about where they will put their support and their money. But could they have done any more to help Northvolt, or had they exhausted all means? It reminds us.

I think it reminds us the transition to this sustainable transportation isn't just technical innovation. It's complex and it's industrial scale up and it's financial sustainability and it's global competition. And ultimately, even when you fund something to the tune of 10 or 16 billion euros, it can still fail.

Certainly, lessons have been learned. What do you think it ultimately does for the European EV industry? I'd love to hear from you. And will somebody look to take it on? The likes of Ascania saying we are interested in certain bits of the business. Love to hear from you. Thanks for listening. And remember, as always, there's no such thing as a self-charging hybrid.