The disappearance of the once high-flying company is “downright disgraceful,” says an MEP.
The European Union wants to develop a homegrown battery industry that can rival China’s, but the bloc’s best chance for battery independence — Sweden’s Northvolt — went bust on Wednesday.
Northvolt’s downward spiral culminated with it filing for bankruptcy in Sweden, putting a court-appointed trustee in charge of selling off what remains of the company and its assets.
“Northvolt’s bankruptcy makes me absolutely furious,” said Swedish member of the European Parliament Sofie Eriksson. “Local communities have invested, done their part, and now Northvolt betrays them. The company has been mismanaged to such an extent that it is forced into bankruptcy. It’s downright disgraceful.”
The EU has been struggling to build a European battery industry, mindful that batteries are the most valuable component of electric vehicles and their production is dominated by China and other Asian countries. The European Commission created the European Battery Alliance with the goal of grabbing about a third of the global battery market. That hasn’t happened.
Fall from grace
The high-flying company counted Volkswagen and Goldman Sachs as its largest backers after its founding in 2016 by two former Tesla executives. It raised more than €15 billion and launched battery factories in Sweden, Canada and Germany.
But its relentless pursuit of growth coupled with lax spending controls led to its downfall.
Unable to keep costs from ballooning, production quickly got off schedule and put its contracts with automakers at risk. The first cracks began to show last summer when BMW canceled a €2 billion contract.
Northvolt co-founder Peter Carlsson resigned late last year as the company filed for Chapter 11 bankruptcy protection in the United States to look for new investors.
A quarter of its workers were laid off last year as part of the restructuring. Attention is now turning to the few thousand who remain. They were told the news on Wednesday morning and given the rest of the day off but are expected to return Thursday morning for their shifts.
The news marks a blow to the small northern Swedish town of Skellefteå that is home to roughly 36,000 people and one of Northvolt’s biggest factories.
“It’s sad for the people who work there and for the city, of course. There have been high hopes around this,” resident Anders Eskilsson told Swedish outlet Dagens Nyheter.
What comes next?
Some, like MEP Eriksson, want Sweden’s government to step in and rescue the company, but the country’s leaders have insisted they have no intention of throwing money at the failing company.
Instead, Stockholm called on the EU to step up.
Shortly after Northvolt made its Chapter 11 filing, Sweden’s Deputy Prime Minister Ebba Busch descended on Brussels to urge the Council of the EU to do more to create a competitive battery industry, telling reporters: “This is not a Swedish issue. This is a European issue.”
The Commission, meanwhile, avoided making any commitment while addressing the Competitiveness Council on Wednesday evening.
“We want to give support for research,” industry czar Stéphane Séjourné told ministers after bringing up Northvolt’s bankruptcy in his opening remarks.
The goal is to “avoid failures in the short term” and give funding to younger companies that “don’t have the support yet from the European Commission and the support they need for scaling up,” he said.
Political mudslinging
Stockholm may not want to save the company, but its politicians are already hunting for who to blame.
Mattias Karlsson, chief whip of the liberal-conservative Moderate party, filed a complaint with the country’s constitutional committee, alleging that former Prime Minister Magdalena Andersson put pressure on the country’s state pension fund to invest in Northvolt while she was the finance minister.
“This is not just a financial disaster. It’s a political scandal,” he told POLITICO.
Andersson’s office was quick to hit back.
“The pension funds in Sweden independently take decisions which investments they make. No government, neither now nor in the past, has authority over their decisions,” her spokesperson said.
Although the government never directly invested in Northvolt, the state-owned pension fund put 5.8 billion kronor (€528 million) into the battery-maker. That investment, along with other investments from early backers like Volkswagen, was written off after the company’s bankruptcy filing in the U.S. last year.
CORRECTION: This article has been updated to correct the political affiliation of Mattias Karlsson. He is the chief whip of the liberal-conservative Moderate party.
