Northvolt, once hailed as Europe’s battery manufacturing champion, has filed for bankruptcy in Sweden after failing to secure the financial support necessary to continue operations.
The company cited multiple factors for its collapse in a Wednesday (March 12) release, including rising capital costs, geopolitical instability, supply chain disruptions and shifting market demand.
The bankruptcy represents a significant setback for Europe’s ambitions to establish a competitive battery sector against industry giants in China and South Korea. Northvolt had positioned itself as a cornerstone of European energy independence, aiming to build a vertically integrated supply chain for electric vehicle (EV) batteries.
As part of the bankruptcy process, a Swedish court-appointed trustee, Mikael Kubu, will oversee the company’s affairs, including the sale of its assets and the settlement of its obligations.
The filing includes several key entities under the Northvolt umbrella, including Northvolt AB, Northvolt Ett AB, Northvolt Labs AB, Northvolt Revolt AB and Northvolt Systems AB.
Northvolt Germany and Northvolt North America have not filed for bankruptcy in their respective jurisdictions; their future will be determined by the Swedish trustee in consultation with the company’s lenders.
Northvolt expressed disappointment in the bankruptcy outcome and pledged to work closely with authorities, trade unions and partners to ensure employees receive necessary support during the transition.
In an email, Evan Hartley, research manager at Benchmark Mineral Intelligence, described the bankruptcy as a severe blow to European efforts to challenge Asia’s dominance in the battery sector.
“Launched with initial hopes for 170 gigawatt hours (GWh) of capacity in Europe, three plants, and full integration of cathode and precursor production, their plans had hit multiple roadblocks in the past few years,” he wrote.
“A wider market of LFP demand growth, plummeting cell prices, and the general difficulty in producing cells were the final nails in the coffin for the Northvolt project,” Hartley added.
Northvolt’s legacy and uncertain future
Despite its financial collapse, Northvolt was able to achieve several milestones.
It ramped up production at its Skellefteå plant, where cell output from serial production lines had doubled, and secured a 50 percent improvement in production yield since September. The company also delivered its first 1 million battery cells to a European customer, produced entirely with fossil-free energy.
Tom Johnstone, interim chair of Northvolt’s board of directors, reflected on the company’s journey and the broader implications of its failure in Wednesday’s press release:
“This is an incredibly difficult day for everyone at Northvolt. We set out to build something groundbreaking — to drive real change in the battery, EV, and wider European industry and accelerate the transition to a green and sustainable future.”
Johnstone emphasized that Northvolt’s work has laid a strong foundation for Europe’s battery industry, despite the company’s inability to survive in its current form.
“For me personally, it remains key for Europe to have a homegrown battery industry, but it is a marathon to build such an industry. It needs patience and long-term commitment from all stakeholders,” he said.
The bankruptcy raises questions about Europe’s future battery production capacity. Data from Benchmark Mineral Intelligence indicates that while Northvolt had originally planned to contribute 170 GWh of battery capacity in Europe across multiple plants, broader market conditions had already begun reshaping the sector.
Statista figures show that Europe’s planned capacity for battery production is still expected to grow, rising from 191.4 GWh in 2024 to 1,160.3 GWh by 2030. Northvolt’s exit leaves a gap in this trajectory, with competitors like Contemporary Amperex Technology (SZSE:300750) and LG Energy Solution (KRX:373220) likely to fill the void.
Additionally, the demand shift toward lithium iron phosphate batteries and the general downward trend in battery prices have made large-scale battery production a challenging business.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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