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Northvolt seemed like it had everything going for it. The Swedish industrial start-up was Europe’s pioneer in battery manufacturing, led by two former Tesla executives, backed financially by big corporate names such as Volkswagen, BMW and Siemens as well as investors including Goldman Sachs and BlackRock. It also had $55bn of orders for its factory close to the Arctic Circle.
But in the past year all that has unravelled rapidly, leaving Northvolt bankrupt, investors nursing big losses and Europe’s hopes of competing with Asian players on the battery technology so crucial to its automotive industry dangling by a thread.
What went wrong with one of Europe’s biggest green hopes and how can other companies avoid such mistakes?
Northvolt moved quickly. By the time it filed first for US protection from creditors in late 2024 and then for bankruptcy in Sweden in early 2025, it had raised $15bn in equity, debt and subsidies from investors and governments, making it by far Europe’s best-funded private start-up. On filing for Chapter 11 bankruptcy protection in the US in November, it had just $30mn of cash left and $5.8bn of debt.
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“Northvolt tried to do too much, too quickly. It needed to focus on just one thing but instead was doing lots of things,” says one former executive.
That one thing was its initial battery factory in Skellefteå, a formerly sleepy northern Swedish city turned into a boom town by Northvolt. Rents soared as much as 10-fold as thousands of outsiders arrived to staff Northvolt’s gigafactory, with some even forced to sleep in shipping containers while searching for accommodation.
The factory’s size was increased several times, with Northvolt aiming to end up at 60 gigawatt hours — each GWh is equivalent to enough to power about 17,000 electric cars. Northvolt’s order book swelled to $55bn, helped by big orders from the likes of VW, Porsche and BMW.
So too did its ambitions — it planned to open a second gigafactory in Sweden in a joint venture with Volvo; a third factory in Germany; a fourth in Canada; a separate battery factory for energy storage in Poland; yet another facility in Sweden for active material to go into the cells; and a research and development centre close to Stockholm.
Meetings at its offices were often held in the corridors as all the rooms were booked — all its facilities were buzzing with activity. “We were spinning so many plates in the air, and then they started crashing down,” says the ex-manager.
Customers were getting twitchy about their orders. But the first real sign of trouble came when two workers died in quick succession at the Skellefteå plant, prompting worries about safety standards. Production stopped and Northvolt fell behind in its deliveries to Swedish truckmaker Scania.
Then, in early 2024, BMW pulled a $2bn order with Northvolt and gave it to an Asian supplier, Samsung BDI, as it worried about receiving its batteries on time. A fundraising round for more capital soon collapsed, sending the company into crisis. There were job losses and projects were cancelled.
Northvolt failed to pull out of the negative spiral and had to file for bankruptcy, even as its production reached record levels. A Swedish bankruptcy trustee is assessing whether anything can be salvaged in terms of selling on its factory in Skellefteå or its R&D centre in Västerås. Scania, part of the VW group, has bought some of its operations and is rumoured to be interested in more.
On Thursday, the trustee decided an imminent sale was unlikely so said that production in Skellefteå would be gradually wound down and would cease at the end of June.
Former executives and outsiders agree that other battery rivals as well as other green start-ups need to focus on one project at a time, ensuring that it is operating successfully and profitably before moving on to the next.
Ten current and former Northvolt employees told the Financial Times of a litany of problems that came from growing so fast. These include chaotic management practices, poorly qualified new hires, an over-dependence on Chinese and Korean workers to operate machinery, and a lack of focus on safety standards.
Investors — such as Goldman Sachs, which wrote off $900mn for its 19 per cent stake in Northvolt — are also criticised for believing too much in the green hype and not pushing the company hard enough to get its Skellefteå project right. “There were red flags here, but too many investors just unquestioningly thought, ‘this is the green transition, we have to invest’,” says one Swedish fund manager who avoided Northvolt.
Now the question for Europe’s remaining battery players — such as France’s ACC and Verkor and Germany’s PowerCo — is whether they will be able to go it alone or if they will have to partner with the likes of China’s CATL and BYD, which dominate the industry.
Crossing the so-called valley of death in the early days of factories, when they do not make enough viable batteries to make money, is particularly crucial.
“We need this industry in Europe, not to provide 100 per cent, but to provide a significant portion,” Yann Vincent, chief executive of ACC, a joint venture between carmakers Stellantis and Mercedes-Benz and TotalEnergies, told the FT recently. “It’s a critical element of European sovereignty.”
