Northvolt

The Crash of Hope and the Failure of a Rushed Transition

Europe wanted to catch up, but it has just lost one of its biggest asset in the battery race. Northvolt, the Swedish company that was supposed to embody the continent’s industrial independence in the electric vehicle battery sector, has just filed for bankruptcy. A shipwreck that speaks volumes about Europe’s haste and lack of preparation in the face of its own energy transition.

A Fragile Economic Model and an Unfavorable Context

Northvolt, with its gigantic ambitions, had established itself as the standard-bearer of a Europe capable of competing with the Asian giants of the sector. Supported by leading investors, including Volkswagen and Goldman Sachs, the company had raised more than $10 billion to develop. But despite this colossal funding, it never managed to achieve its production targets. The market, meanwhile, did not wait: manufacturers lost patience, and Asian competition, much more competitive on price and production, continued to nibble away at market share.

LFP (Lithium-Iron-Phosphate) batteries, massively produced in China and used by players such as BYD and CATL, have become dominant thanks to their reduced cost. Europe, meanwhile, has focused on NMC (Nickel-Manganese-Cobalt) technology, which is more expensive and less competitive in the face of manufacturers’ profitability imperatives. The result? An untenable economic model, production costs that are too high, and a market that has turned away from Northvolt.

An Imposed but Poorly Prepared Transition

The Northvolt case is the perfect example of an energy transition carried out at breakneck speed without a truly solid industrial strategy. Europe imposed drastic deadlines for the switch to all-electric, without ensuring that the ecosystem was ready. The result: industrial projects that are struggling to emerge, players who are unable to keep up, and a market that is massively shifting towards solutions from Asia.

The massive investments in Northvolt’s development have not been enough to compensate for an implacable economic reality: without competitiveness, without solid structuring, and without a demand that is sufficiently aligned with supply, ambitions turn into financial black holes. BMW, once a key partner, broke its $2 billion contract with Northvolt in 2024, dealing a fatal blow to the company.

Can Europe Still Compete?

Northvolt’s bankruptcy raises a fundamental question: does Europe really have the means to achieve its ambition in the field of electric vehicles? While battery production is dominated by Chinese, Korean, and Japanese companies by more than 90%, the European Union is struggling to build a credible alternative. Gigafactory projects are piling up, but none has yet proven its ability to compete with Asia.

The dogma of all-electric, imposed without an industrial safety net, is now showing its limits. European manufacturers themselves are revising their plans: Volkswagen, Mercedes, and other giants are reassessing the relevance of total electrification and are once again looking at optimized internal combustion engines. Proof that Europe may have put the cart before the horse.

A Lesson to Learn

Northvolt is the story of an industrial dream that collapses under the weight of a rushed transition. Wanting to impose a model without having solid foundations is taking the risk of seeing one’s industry collapse in the face of better-prepared competitors. Rather than chasing unrealistic deadlines, Europe must now revise its strategy and build a strategy that does not sacrifice its competitiveness on the altar of political decisions disconnected from reality.

Electric may be the future, but you still have to give yourself the means. And for the moment, Europe is paying a heavy price for its impatience.