Europe’s Big Battery Hope NorthVolt Files for Bankruptcy Formally

Northvolt, the Sweden based battery maker that many in Europe saw as a future champion, has filed for bankruptcy in Sweden on Wednesday.

Northvolt has reportedly raised has raised more than $14 billion, which clearly wasn’t managed too well, as the firm’s bankruptcy filing in the US in November last year demonstrated.

“Northvolt has experienced a series of compounding challenges in recent months that eroded its financial position, including rising capital costs, geopolitical instability, subsequent supply chain disruptions, and shifts in market demand,” the company said in a statement.

Northvolt had widely been projected as Europe’s answer to Chinese, South Korean an Japanese dominance of the battery landscape, helping it raise lavish funding at generous valuations. Besides these, grants and other concessions were routinely provided.

It had even maneged a $5 billion debt deal in January 2024, but the failure to close deals, or deliver on promises finally tripped up the firm.

The cancellation of a $2 billion contract in June 2024 by BMW was the clearest indicator that the end was near,  especially as Chinese giants like BYD and CATL continued to thrive and deliver, on commitments and even further innovations in the sodium ion battery space for instance. The experience simply underlines that throwing money at startups in Europe without considering the severe cost differences in operating in the continent versus say, in Asia, especially China will just not work.

Europe has sought to look at other non-tariff measures like the Carbon Border Adjustment Mechanism (CBAM), due to come in from 2026 in phases, but even that can be expected to face a severe push back. The start of the Trump presidency also augurs poorly for prospects of a concerted effort between Europe and the US to ‘balance out’ the battery market with their own strong firms. Even in the US, Quantumscape, the American version of a future battery champion, has been failing to meet commitments, and will need to show progress soon. The solid state battery maker is widely seen as a strong contender to counter Chinese dominance.