On March 12, 2025, Swedish battery manufacturer Northvolt officially filed for bankruptcy in the Stockholm District Court, an event that caused a huge shock in the battery industry in Europe and even the world. Northvolt's bankruptcy not only reflects the company's own operational challenges, but also reveals the severe test that the European battery industry faces in global competition. This is a wake-up call for the European battery industry, but it also provides valuable lessons and lessons. China Exportsemi will start from this event and take you to understand the current situation of the European battery industry.
1. Rise and fall of Northvolt
Founded in 2016 by former Tesla executives Peter Carlsson and Paolo Cerruti to take advantage of the Nordic abundance of green energy to challenge Asia's leading companies in the battery sector. In the early days, the company received support from major European industrial groups, including orders from automakers such as Volkswagen, BMW, and Scania, as well as financial support from well-known investors such as Goldman Sachs and BlackRock. As of 2022, Northvolt's cumulative customer orders have reached $55 billion.
However, Northvolt's path to expansion has not been smooth. Its plant in Skelefteå, Sweden, began producing batteries in 2021, but production was much lower than expected. In 2023, the total production will be only 0.05% of the theoretical capacity. In addition, the company also faced problems such as difficulty in production ramp-up, poor management, and frequent safety accidents. In 2024, BMW canceled a $2 billion battery order, citing delays and quality issues, which dealt a major blow to Northvolt. Eventually, Northvolt filed for bankruptcy in March 2025 with a total debt of $5.8 billion and liquidity to keep it running for just one week.
Figure: $15 billion investment in vain! Northvolt, the first brother of European batteries, went bankrupt, where does the industry go in the future?
2. Challenges for the European battery industry
Northvolt's bankruptcy highlights the many challenges facing the European battery industry as it grows. First, Europe has shortcomings in the supply of key raw materials. EV manufacturers in the EU and the UK are currently only getting 16% of the lithium, cobalt and nickel needed for their 2030 target production. In addition, Europe is already "miles behind" in the global race for raw materials for EV batteries, and is highly dependent on imports of processed lithium from countries such as Chile, the United States, China and Russia.
Second, the European battery industry is facing strong competitive pressure from Asian, especially Chinese battery manufacturers. CATL, the world's largest battery maker, has plans to build factories in Germany, Hungary and Spain. Chinese battery manufacturers dominate the global market with strong technical strength, complete industrial chain and cost advantages. In contrast, there is a clear gap between European battery manufacturers in terms of cost control, production efficiency and technological innovation.
In addition, Europe's industrial policy support is relatively insufficient. Although the EU has passed the Net Zero Industry Act and the Critical Raw Materials Act, which aim to promote the development of the local battery industry, Europe's subsidies and policy implementation are still insufficient compared to the United States and China. The U.S. Inflation Reduction Act (IRA) has provided high subsidies to local battery makers, attracting many European battery companies to turn to the U.S. market.
3. The impact of Northvolt's bankruptcy
The bankruptcy of Northvolt has had a profound impact on the European battery industry. First, it exacerbates the uncertainty of the European battery industry, making other European battery manufacturers, such as France's Verkor and ACC, and Volkswagen's PowerCo, face greater competitive pressure and development difficulties. Secondly, the bankruptcy of Northvolt may lead to the rupture of the European battery industry chain, affecting the survival and development of related upstream and downstream enterprises. For example, Porsche, which had a supply contract with Northvolt, began to look for an alternative after learning of its bankruptcy.
However, the bankruptcy of Northvolt also provides an opportunity for the European battery industry to rethink and adjust. It has prompted European policymakers and companies to pay more attention to the development of the battery industry and recognize the importance of establishing a local battery industry. As Tom Johnstone, interim chairman of Northvolt after its bankruptcy, said, Europe must have its own industry in the core area of batteries, otherwise it will have to rely on Asian suppliers for a long time.
4. Solution: Enhance the competitiveness of the European battery industry
In order to meet the challenges, the European battery industry needs to take a series of measures to improve its competitiveness. First of all, Europe should increase policy support for the battery industry, including providing more financial subsidies, tax incentives and R&D funds to help local battery companies overcome the shortage of funds and high costs.
Second, Europe needs to strengthen the supply of key raw materials, and reduce its dependence on external supplies by increasing the development of local resources, strengthening international cooperation and promoting the recycling of raw materials.
In addition, European battery companies should strengthen technological innovation and management optimization, improve production efficiency and product quality, and reduce costs to enhance their competitiveness in the global market. For example, Northvolt was aware of its problems before bankruptcy and took some measures, such as selling some of its subsidiaries and adjusting its expansion strategy. Although these measures failed to save its bankruptcy fate in time, they provided a reference for other European battery companies.
Finally, Europe should strengthen international cooperation in the battery industry, establish strategic partnerships with battery companies and scientific research institutions in other countries and regions, and jointly carry out technology research and development, project construction and market expansion, so as to achieve resource sharing, complementary advantages and mutual benefit and win-win results.
5. Conclusion
The bankruptcy of Northvolt is undoubtedly an important turning point in the history of the development of the European battery industry. It not only exposes Europe's shortcomings in supply chain, technology, cost control and policy support, but also further exacerbates the uncertainty of European local battery companies in global competition. However, crises often breed opportunities for change.
In the face of the shock caused by the bankruptcy of Northvolt, Europe needs to accelerate the adjustment of industrial strategy, improve the autonomy of supply chains, strengthen policy support, and encourage enterprises to increase technological innovation and cost optimization to enhance global competitiveness. At the same time, Europe should strengthen industrial cooperation with Asia and North America to build a more stable and sustainable battery ecosystem.
The fall of Northvolt does not mean a complete failure of the European battery industry, but a profound warning that if Europe does not adjust its strategy quickly, more local companies may follow in the footsteps of the future. At a time when the global electrification wave is accelerating, Europe must seize the opportunity to reshape its position in the global battery market with a more pragmatic and forward-looking layout.
