Sweden Northvolt bankruptcy storm: impact on the layout of the European battery industry

On November 21, 2024, a heavy news has aroused wide attention in the European and even the global business community. Northvolt, the Swedish battery maker, announced that it had filed for Chapter 11 bankruptcy protection in the United States, as the company that had been the cornerstone of Europe's ambitious plan to reduce its dependence on Chinese battery makers struggled to survive amid production problems, the loss of key customers and a shortage of cash. This situation has also brought a heavy blow to the layout of the European battery industry.

The birth of Northvolt is an important symbol of Europe's pursuit of independence and development in the field of battery manufacturing. In recent years, with the vigorous rise of the global new energy industry, battery as a core component, its strategic significance has become more prominent. Europe sees a huge opportunity in this, but also realizes that excessive reliance on external battery supplies, especially dependence on Chinese battery manufacturers, may face many constraints in the key process of industrial development and energy transition. As a result, Northvolt came into being, with a lot of investment, top technical team and policy support from European countries, trying to create a local, radiation global battery manufacturing giant, and then change the passive situation in Europe in battery supply.

However, the ideal is very rich, the reality is very cruel. Production problems were the first stumbling block on Northvolt's path. Battery manufacturing is an industry with high requirements for technical process and production process control, from the accurate proportion of raw materials, to the assembly of the battery cell, and then to the overall quality detection, every link can not tolerate any error. Perhaps it is the technical bottleneck encountered in the capacity climbing stage, or perhaps the production management system is not perfect, resulting in low production efficiency and product yield failure to meet expectations, which not only increases the cost, but also makes the delivery delayed, which affects its reputation and competitiveness in the market.

The loss of a key customer has made Northvolt's situation even worse. In the business world, customers are the lifeblood of enterprises, especially those important customers who occupy a large share of orders. Perhaps due to the inability to deliver products on time and in good quality, or competitors offered more attractive cooperation terms, some large customers who had trusted Northvolt have lost. This means that the volume of orders has fallen sharply, the income has shrunk sharply, and the capital chain of enterprise operations has become increasingly tight.

The lack of money, like the sword of Damocles hanging over Northvolt's head, could cut off its hopes of survival at any time. The battery manufacturing industry needs huge capital investment in the early stage for the construction of plants, the purchase of advanced equipment and research and development of new technologies, which is faced with a long return on investment cycle. When there were problems in the production and sales links, difficulties in recovering funds, coupled with changes in the external financing environment and other factors, Northvolt fell into the mire of capital shortage and was difficult to extricate itself.

From the point of view of the entire battery industry in Europe, the impact of the Northvolt bankruptcy is far-reaching. Originally, Europe tried to reduce its dependence on Chinese battery manufacturers by supporting local battery companies and creating a complete industrial chain, and then occupy a place in the global new energy industry competition. But now the crumbling Northvolt has dealt a blow to that plan. On the one hand, the upstream and downstream industrial cooperation built around Northvolt is facing a reshuffle, the supplier may face the risk of bad debt, and the downstream enterprises need to find a reliable battery supplier again. On the other hand, this also casts a shadow on other battery manufacturers in Europe, investor confidence may be hit, and the development pace of the entire European battery industry may slow down.

But crises are often accompanied by opportunities. This incident also sounded the alarm for Europe, prompting it to reflect more deeply on the problems in the development of the battery industry, such as how to further optimize industrial policy, strengthen technology research and development investment, improve industrial support, etc., perhaps the future European battery industry can be regenerated on the basis of lessons learned, and walk out of a more resilient and competitive development path.