Northvolt Goes Bankrupt, Dimming Europe’s Domestic EV Dreams 

Europe’s dream of building an electric-vehicle supply chain to rival China is running out of juice faster than a bargain-bin AAA battery. 

Swedish EV-battery maker Northvolt filed for bankruptcy yesterday after failing to survive against dominant Chinese competitors. It’s one of the biggest bankruptcies in Sweden’s history and signals that it’s not easy to break China’s chokehold on the EV supply chain.

More than $14 billion worth of investments wasn’t enough to keep Northvolt out of the red. The battery maker was reportedly burning through $100 million per month as of last year. 

Northvolt blamed supply chain kinks caused by geopolitical instability, along with shifting EV demand, for its demise. The company also said that it’s struggled to ramp up production in an industry it called highly complex. Last summer, BMW canceled a $2 billion contract with the battery-maker after Northvolt missed delivery deadlines. 

It seems the gap between Northvolt and its Chinese rivals was too big to close.

Green Energy, Red Flag

China produces over three-quarters of the world’s EV batteries. And just two Chinese companies account for over half of the global industry: CATL, which dominated battery-making with about 37% market share last year, and BYD, which claimed about 17%. 

Behind China, Korean and Japanese suppliers are racing to grab more of the market, while Europe (and the US) are tiny specks in the distance. 

• While EV manufacturing is heating up in the EU and the US, some of the growth is being led by the same Chinese companies as they try to future-proof for tariffs. 
• CATL is doubling its EU footprint with two new battery factories, and is licensing its tech to Ford for a US plant — which could be awkward after Trump added it to a list of companies with ties to China’s military last month. 

But it’s hard, if not impossible, to pick up and move the entire EV supply chain. Before factories can even start building batteries, they need key components like cathodes and anodes — of which China controls more than 90%.

Still Charging: It’s nearly impossible to fully cut China out of the EV picture in the near-term. Like Northvolt pointed out in its bankruptcy statement, it’s a highly complex industry — and China has a huge head start on the rest of the world. In the meantime, EV costs could rise while adoption slows.