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When Peter Carlsson announced in 2016 that he planned to build a battery factory in Sweden, he was met with scepticism in his home market. The money needed to construct the factory, which had a capacity goal of 16GWh, and employ some 2,500 people to staff it was estimated at €4bn — a sum that seemed enormous at the time.
Sweden has a rich history of large industrial companies like ABB, Scania and Volvo — some of which have been around for the better part of a century. However, the question industry onlookers were asking was: could Sweden create a new industrial player capable of competing globally?
Carlsson, who had worked directly with Elon Musk as CPO and head of supply chain at Tesla, earned the nickname “the Tesla Swede”. I remember him saying he wanted to bring the visionary aspect of Tesla and Musk combined with European company culture. The Tesla card, used by Carlsson and his cofounder Paolo Cerruti, former VP of global supply chain at Tesla, gave them “a bit more credibility and opened a few more doors”, Carlsson told me back in 2019.
The pitch was to compete with Tesla, which was also building gigafactories. Within a few years — supported by contracts with Volkswagen and Scania — Carlsson had convinced much of Sweden the idea was achievable.
But the last year has shown that building a new European industry to compete with China is easier said than done — no matter how much European countries are banging the tech sovereignty drum. Northvolt raised $13bn in debt and equity over time, a journey that culminated in the company filing for Chapter 11 bankruptcy in the US last week and CEO Carlsson stepping down. It’s not what most people would have imagined happening to the Swedish startup in the early days.
Although Northvolt became a media darling, not everyone was convinced when the company started making headlines in 2016. Lars Avellán of Swerea IVF, a Swedish research group specialising in applied scientific research in materials development and production, at the time said no one had yet proven it was possible to conduct commercial and profitable production of lithium-ion battery cells outside of Asia — China being the market leader.
He told Swedish tech magazine Ny Teknik in October that year: “I think he is aiming both too high and not hitting the mark. So, I don’t think he will succeed.”
In June 2019, Northvolt put a lot of the doubt surrounding the company to bed when it raised a $1bn funding round — then the largest in European tech history. In the same year, Northvolt and Volkswagen announced plans for a joint gigafactory in Germany. Northvolt also began expanding its vision for Northvolt Ett in the northern town of Skellefteå (later referred to as the Klondike of Sweden), one of the first two plants the company built, the other being a development plant in Västerås outside Stockholm.
Instead of a 16 GWh factory, planned production capacity at Northvolt Ett was upped to 32 GWh, with a further increase to 40 GWh announced just months later – to meet the future demand of the car industry.
When visiting the site of the planned development facility in Västerås in November 2019, Carlsson told the Financial Times: “Over the next 10 years, we will see the industrial landscape for the industry shaping. We think 150 GWh, or 25% market share, is not unrealistic.”
When I spoke to Carlsson in June 2019, Northvolt had 300 employees. Over time, however, the company announced it was receiving up to 10k job applications a month. The ability to attract talent from the US to relocate to the northern town of Skellefteå was linked to the founders’ Tesla network; they managed to attract people from Tesla, Amazon and Google. But it wasn’t just international talent — some of the smartest people I knew in Stockholm were eager to join what was fast becoming Sweden’s most exciting company in decades. Who cared about Spotify or Klarna when you could work for a climate tech company like Northvolt?
Over the next two years, before the Northvolt Ett factory had manufactured a single cell, multi-billion euro contracts were signed with BMW and Volkswagen and more capital was raised — including a $1.6bn debt round and $600m equity round.
Jesper Wigardt, Northvolt’s former communications director, said in 2021 the factory in Skellefteå needed to reach a capacity of 16 GWh by 2023 and 40 GWh by 2025 to meet demand and that Northvolt, at the time, was on track.
What happened?
In September 2022, the first reports emerged of production delays at Northvolt’s factory as Carlsson announced the company’s 2023 timeline of 16 GWh production would not be met. Instead, the capacity target would be reached in 2024. He told Swedish publication Dagens industri: “These are the kinds of lead times involved, and it also depends on harmonisation with various launch projects with different car brands.”
This marked the beginning of a series of delays. Over the next year and a half, however, most headlines still focused on the company securing additional funding, plans for new factories and discussions about a potential IPO in Stockholm.
Then, in late 2023, Dagens Industri reported on Northvolt’s ‘secret’ third-quarter results. The battery company was far from meeting its production targets and, during the first nine months of 2023, delivered battery cells equivalent to just 79.8 MWh — less than 0.5% of the planned annual capacity of 16k MWh (16 GWh) for 2024.
“We have an extremely advanced and high-quality product, which in turn leads to a very complex production process. It takes time to create a truly excellent product. It’s an expensive learning curve, but everyone has to go through it,” Carlsson told Dagens Industri at the time.
The company was also burning through a lot of cash. For the first nine months of 2023, losses increased from SEK 1.3bn (€113m) the previous year to nearly SEK 11bn (€950m) and it needed to raise additional funds, which it secured in January this year. A $5bn non-recourse loan was earmarked for factory expansion and other projects rather than day-to-day operations.
Earlier this year, when Sifted examined the loans Northvolt announced from governments as well as the European investment bank, we found most of it never reached the company’s bank account. Out of €2.7bn, it received €531m, much to do with the expansion of Northvolt Ett never happening.
To cover its cash-burning operations, Northvolt tried, and failed, to raise $1.2bn in the first half of 2024. BMW also cancelled an order worth €2bn in June and the company then underwent a strategic review of its operations, the outcome of which led to the closure or sale of several plants and 1,500 job losses — roughly a quarter of its global workforce.
Although the company drastically cut costs, Northvolt failed to secure a rescue package of $300m to keep operations running past the new year — leading to the bankruptcy filing and Carlsson’s resignation last week.
So, after raising more than $13bn in debt and equity, why did Northvolt fail? Was it a flawed business plan, poor execution or is there just not a market for a European battery project like it?
Some have put it down to competition from Chinese companies — China dominates battery cell production and the supply chain, giving its companies the ability to undercut suppliers on cost.
Perhaps it would have been wiser to focus on running one factory before scaling up with additional ones. But to compete with the Chinese, Northvolt needed the scale to make its batteries competitive on price.
Northvolt also had to rely on Chinese suppliers (two out of Northvolt’s five biggest suppliers were Chinese) and some reports suggest the Swedish company was using inferior machinery from China, which is said to have caused other issues at Northvolt.
Northvolt also hired as many as 100-150 people a month while it was scaling. Two people close to the company, who preferred to remain anonymous to protect relationships, told me the speed of recruitment left many unsure of what was expected of them. This created confusion, with people effectively running after the same goals.
Perhaps it’s unreasonable to expect the first company to pioneer sovereign European battery production to succeed, a person with good knowledge of the industry told me a couple of months back. The logistics and supply chain of battery materials are incredibly complicated, and even if Northvolt failed in its initial goals, at least it has laid the groundwork for the sector — perhaps with lessons learnt, but more so in setting up supply chains in Europe for future industry players.
I don’t want to be a pessimist, but seeing the ‘Tesla Swede’s’ dreams of a European battery factory with 25% of the global market share grind to a halt, I think it will take a long time before another European dares to have the same grand vision — at least when it comes to European battery sovereignty.
Readers, what do you think? What could Northvolt have done differently? Is there still a way for European sovereignty when it comes to batteries? Let me know your thoughts.
Northvolt timeline
2015: The company SGF Energy (Swedish Gigafactory) is set up by four founders. Two of them — CEO Peter Carlsson and chief operating officer Paolo Cerruti — came from Tesla, where Carlsson was CPO and head of supply chain and Cerruti was VP of global supply chain. They both worked closely with Elon Musk.
2016: Peter Carlsson starts to speak about the company in the media and the aim to build a gigafactory in Sweden.
March 2017: SGF Energy changes its name to Northvolt and officially launches.
2018: The construction of Northvolt Ett, the company’s large battery factory in Skellefteå in the north of Sweden starts. The same year the construction of the company’s R&D centre Northvolt Labs begins in Västerås.
June, 2019: Northvolt raises $1bn — its first big chunk of money — from Goldman Sachs and Volkswagen. The investment from Volkswagen gives the car manufacturer a 20% stake in Northvolt and is linked to a plan to open Northvolt Zwei as a 50/50 joint venture, in Salzgitter, Germany. One year later, Volkswagen takes over the construction and infrastructure of the Salzgitter factory.
Dec, 2019: Northvolt launches a recycling program, Revolt, targeting 50% recycled material in new cells.
July, 2020: Northvolt raises a $1.6bn debt round from German state-owned investment bank KfW, the European Investment Bank, Danske Bank, The Export-Import Bank of Korea, BNP Paribas and others.
Sept, 2020: The company raises $600m in equity from Goldman Sachs, Baillie Gifford, Norrsken Foundation, Spotify founder Daniel Ek and Volkswagen.
Feb, 2021: Northvolt acquires San Francisco-based battery technology company Cuberg, which the company says will develop next-generation battery cells with a lower price point, better performance and increased safety.
March, 2021: Northvolt receives its largest order to date: a $14bn battery cell order from its shareholder, Volkswagen, which brings its order book to $27bn.
June, 2021: Northvolt raises $2.75bn in equity from Goldman Sachs, Baillie Gifford, Volkswagen, Cristina Stenbeck and the IMAS Foundation, among others.
Dec, 2021: The construction of Northvolt Dwa in Gdansk, Poland begins. In the same month, Northvolt celebrates producing the first battery at Northvolt Ett.
May, 2022: Northvolt delivers its first battery to a customer in the car industry; the name of the company is not disclosed. It also announces the plan for a recycling plant, Revolt Ett, next to Northvolt Ett in Skellefteå.
July, 2022: Northvolt raises a $1.1bn convertible loan from BlackRock, CPP Investments, OMERS Capital Markets, Baillie Gifford, Swedish pension funds AMF, AP funds 1-4, Volkswagen Group and others.
Aug, 2023: Northvolt raises a $1.2bn convertible loan from BlackRock, CPP Investments, OMERS Capital Markets, Baillie Gifford and others to further finance its European and North American expansion. At the same time, Northvolt announces the assembly of its first energy storage system (ESS) at Northvolt Dwa.
Sept, 2023: Northvolt announces its sixth factory, Northvolt Six, to be built in Montreal, Canada.
Jan, 2024: The European Union greenlights a $902m German state aid deal for the construction of Northvolt Drei in Heide, Germany. One week later, Northvolt raises $5bn non-recourse project financing, the largest green loan in Europe, for the expansion of Northvolt Ett, for its recycling plant Revolt Ett and to re-finance the $1.6bn loan from 2020. The loan comes from a group of 23 commercial banks, alongside the European Investment Bank and the Nordic Investment Bank.
March, 2024: The construction of Northvolt Drei in Heide, Germany begins.
June, 2024: Northvolt abandons plans for a fourth factory in Borlänge, Sweden. In the same week, company shareholder and customer BMW cancels a €2bn contract with the battery manufacturer because of production delays.
July, 2024: CEO Peter Carlsson says Northvolt is reviewing the timelines for its international expansion plans in Germany’s Heide and Canada’s Montréal. In the same month, Alexander Hartmann, the company’s CFO for seven years and tipped to take Northvolt through an IPO, is replaced by Pia Aaltonen-Forsell, formerly CFO at Outokumpu, a sustainable steel company.
Aug, 2024: Northvolt announces it’s closing its R&D centre in San Francisco.
Sept, 2024: Northvolt’s strategic review results in 1,500 jobs being cut — a quarter of the company’s global workforce — and it adjusts its ambitions for Northvolt Ett to 16 GWh, which it originally planned for in 2017.
Oct, 2024: The expansion of Northvolt Ett is suspended and its sister development company, Northvolt Ett Expansion, which was tasked with the expansion of Northvolt Ett, files for bankruptcy.
Nov, 2024: Northvolt files for Chapter 11 bankruptcy in the US and Carlsson steps down as CEO but stays on as an advisor and board member.
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