The News
Battery maker Northvolt filed for bankruptcy in Sweden Wednesday, citing “compounding challenges,” including rising costs, geopolitical instability, and shifting demand. It had already filed last year for Chapter 11 bankruptcy in the US.
Northvolt’s demise deals a major blow to Europe’s ability to compete with China in the electric vehicle market. “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,” the interim chair of Northvolt’s board of directors said in a statement.
A Swedish court-appointed trustee board will now oversee a sale of Northvolt’s assets, the company said.
SIGNALS
EU tariffs on Chinese EVs aren’t enough to help European manufacturers
Production costs associated with the building and manufacture of electric vehicles are substantially higher in Europe than they are in China. And European Union tariffs on EVs from China aren’t enough to bridge that price gap, Coface analysts argued, stressing the need for higher surcharges of between 45% and 55% to be imposed. While EU tariffs do appear to have reduced sales on the continent of some Chinese EV brands in February, Chinese giant BYD has increased its market share. As one expert at the Bruegel think tank wrote, the tariffs could ultimately backfire, hurting European consumers and even hold back European EV makers from innovating in order to compete better on a global scale.
Northvolt’s problems went beyond competition from China
Northvolt’s downfall can not simply be attributed to China — the global leader in electric batteries — undercutting the Swedish battery maker’s prices, the BBC reported: Missing production targets, expanding too quickly, and leadership problems have also been cited as factors in its demise. Speaking to the Financial Times last year, Northvolt employees said that the company had grown too fast, leading to internal chaos and incompetent management. “They bit off more than they could chew,” one former engineer said.