Europe's Battery Dream Goes Bust: Inside Northvolt's Collapse
Northvolt, a battery manufacturer that was once expected to break the dominance of the Asian battery industry, has finally filed for bankruptcy protection, leaving behind 5.8 billion US dollars in debt and a mess. This company born with a “silver spoon” in its mouth has orders from giants such as Volkswagen and BMW, and enjoys huge subsidies from the European Union and governments around the world. Why did it ultimately fail? Northvolt's experience may provide us with some food for thought about future global cooperation.
The story begins with a conversation between Dr. Zeng Yuqun, the founder of CATL, and Nicolai Tangen, CEO of the Norwegian Sovereign Wealth Fund. In response to Tangen's question about competitors, Zeng Yuqun confidently said, “I think our competitors are ourselves,” and added, “I don't consider they as competitors.” At the same time, during the conversation, Zeng Yuqun pointed out incisively that European battery companies have made “almost every mistake” in design, craftsmanship and production, prophetically predicting the fate of Northvolt.
Why is this the case? Today, let's explore:
1. The loss of idealism: overestimating oneself and underestimating reality
Northvolt's failure stems first and foremost from a serious misjudgment of reality by its founding team and European policymakers. They overestimated Europe's technological strength and industrial base, and underestimated the complexity of battery manufacturing and the deep accumulation of Asian companies in this field.
From the very beginning, Northvolt positioned itself as an “environmentally friendly company that only produces power batteries using environmentally friendly energy”. In other words, while the battery giants in China, Japan and South Korea were still struggling to meet ESG standards, Northvolt tried to take the lead in the ESG field on the first day of its establishment. This concept is certainly commendable, but it ignores the core competitiveness of battery manufacturing – cost and scale. At a time when the technology is not yet mature and the cost is still high, overemphasizing the concept of environmental protection is undoubtedly putting the cart before the horse.
In addition, Northvolt's decision to locate its factory in the small town of Skellefte?, just inside the Arctic Circle, because of its pursuit of clean hydropower energy, has also exposed its flawed decision-making. For manufacturing, the city has days longer than 21 hours in the summer, and only two hours from sunrise to sunset in the winter. The workers who moved there have all had their biological clocks thrown off, and skilled European technicians are simply unwilling to apply for the job, and even the locals in Sweden are unwilling to come to work.
In the end, not only was there a lack of capable industrial engineers or management experts, but even the production workers were in chaos. A small Northvolt factory actually accommodates thousands of workers from more than 100 countries and regions. Without even smooth language communication, it is simply impossible to work normally. Extreme climatic conditions and a remote location have made it difficult for Northvolt to attract and retain skilled workers. In the end, it can only rely on outsourced teams, and the production efficiency and product quality can be imagined.
2. Lack of an industrial chain: the embarrassment of “Made in Europe” and the value of China's experience
Northvolt's failure also exposes Europe's shortcomings in the battery industry chain. Despite its strong scientific research capabilities and high-end manufacturing base, Europe is heavily reliant on China for battery raw materials, key equipment, and production processes.
Northvolt's factory construction, equipment installation, and technical support almost all rely on the help of Chinese suppliers. As some former employees said, “We have no technology and no knowledge. We have to be taught everything by the Chinese. They gave us the machines and built the factory. Without them, we wouldn't know anything.”
On the one hand, tens of billions of dollars in financing is being consumed in various ways, while on the other hand, there are frequent problems at the production facilities.
According to a follow-up report by Swedish television station SVT, starting in 2021, there have been at least 47 accidents involving the leakage of particularly hazardous chemicals at the Northvolt factory. The leaked chemicals include electrolytes and NMP (N-methylpyrrolidone), NMC (lithium nickel manganese cobalt oxide), etc., which are needed to produce batteries. These chemicals are not only carcinogenic and reproductive, but also directly threaten life safety. In addition to chemical leaks, Northvolt workers also make mistakes frequently in their daily work. According to employees of the supplier that provides them with technology, for example, workers in the factory will randomly put miscellaneous objects into the formation equipment used to rest the battery, and then the machine will often report errors and require the supplier to follow up and solve them.
Industry experts believe that Northvolt's fundamental cause of its difficulties is carrying out too many businesses and making too many plans at the same time. However, what CATL founder Zeng Yuqun said in his sharp assessment of why Northvolt can't make good batteries is spot on: “Because their design is wrong. Secondly, their process flow is wrong. Thirdly, their equipment is wrong. ... It starts with a wrong design. This means that if they don't understand electrochemistry or side reactions, as I mentioned, the design will be wrong. They never cover the risks that will occur in the future. That's why one day the performance and testing seem good, but when you want to scale up, problems arise. The process they want to develop never covers what is needed in the future.”
Yes, as a battery manufacturer, Northvolt's only problem is that it finds it impossible to make batteries.
To be fair, Northvolt is not entirely a scam. Its founding team came from Tesla's supply chain and knows a lot about batteries. But the objective shows that there are not many people in Europe who know how to build a battery manufacturing plant from scratch.
Northvolt's experience proves that battery manufacturing is not simply a matter of piling up money and piecing together technology, but requires the collaborative development and long-term accumulation of the entire industry chain. The success of Chinese, Japanese and Korean companies in the battery field is precisely due to their complete industry chain layout, large-scale production capacity and continuous technological innovation.
3. East-West cooperation: removing barriers for a win-win future
The bankruptcy of Northvolt has poured cold water on Europe's battery dream, but it has also provided a new opportunity for East-West cooperation in this field.
For Europe, instead of clinging to the obsession of “Made in Europe”, it is better to lower its profile and actively seek cooperation with Chinese companies. By introducing Chinese technology, equipment and talent, Europe can quickly improve its own battery industry level and shorten the gap with Asia.
For Chinese companies, going abroad and participating in international competition is the only way to improve their own strength and expand their market share. Cooperation with European companies can help Chinese companies better integrate into the global industrial chain, enhance brand influence and technical discourse power.
As CATL founder Zeng Yuqun once said, “Our competitors are ourselves.” Rather than competing with each other and erecting barriers, it is better for East and West companies to work together and make progress together. Only by removing trade barriers and strengthening technological exchanges can the healthy development of the global battery industry be promoted and the challenges posed by climate change be jointly addressed.
The failure of Northvolt is a wake-up call for the development of the European battery industry and has also brought new opportunities for East-West cooperation. Let's hope that in the future, both sides can put aside prejudices, work together, and jointly create a bright future for the global battery industry.