The downfall of Swedish gigafactory Northvolt — which crashed into administration at the end of last year — has left many in Europe questioning whether the continent can ever hope to have a home-grown battery supply.
But Northvolt isn’t Europe’s only shot. Five-year-old French company Verkor has raised $2.1bn for its EV battery factory, has backing from Renault and is set to deliver its batteries to customers this year.
Yet there are significant headwinds facing the industry — from mounting competition from China to supply chain constraints — leaving many to ponder whether Verkor can avoid Northvolt’s fate.
There are things working in its favour, however; as one banker puts it, “Verkor has the decade’s epic case study on how not to do it to learn from.”
Verkor told Sifted that, while some investors have raised concerns about the impact of Northvolt’s situation, it remains confident in its strategy: “Our secured financing structure, long term industrial partnerships, and clear roadmap position us for sustainable growth.”
The Verkor story
Verkor was launched in 2020 by six cofounders, two of whom joined from Tesla. Northvolt also has Tesla alums as cofounders.
Verkor is building a gigafactory in Dunkirk in the north of France, which will eventually produce 16 GWh of EV batteries each year — enough for 300k cars. Verkor started construction at the 80-hectare site in 2023 and is aiming to deliver batteries to customers from the site starting this year.
In 2023, Verkor raised €1.2bn in debt for the factory. At the end of 2024, it closed another €1.4bn in debt financing.
Public documents filed late last year show that Verkor is also planning a new €2bn project to expand the current gigafactory by adding two factories on a neighbouring 70 hectare site. The documents state that this will enable the scaleup to produce batteries for up to another 300k cars per year (the plans are still subject to approval).
Verkor confirmed to Sifted that the project has been referred to France’s industrial planning committee for approval. “We want to be ready when demand increases,” the company said.
Verkor also has an innovation centre in Grenoble, where it carries out R&D.
Northvolt’s flaw: quick-paced expansion?
The gigafactory in Dunkirk is Verkor’s only project under construction for now — making its expansion plans a whole lot less quick-paced than Northvolt’s.
By the time it filed for bankruptcy, Northvolt — which had raised $13bn in debt and equity and signed contracts with Volvo and Scania — had one factory up-and-running in Sweden, with three others in the works. It was also building a lithium refinery in Portugal, a recycling facility in Poland and a testing facility in the US.
Evan Hartley, research manager at analyst firm Benchmark Minerals, says Northvolt’s attempts to expand “vertically” (into other parts of the battery supply chain) echo Chinese companies BYD and CATL. The difference, Hartley says, is that those companies had successful gigafactories up-and-running for a long time before they started new ventures.
“Northvolt was experimenting with multiple types of products and modalities,” Gregory Bernstein, a former EQT investor who led the VC’s investment in Verkor, and still advises the scaleup today, tells Sifted. “They had several projects running at the same time, and in hindsight more than they should have.”
Verkor describes its strategy as: “Focusing on one factory, one main customer, one main product, in one location.”
“[Verkor] have their innovation centre, they really want to focus on those samples up to a point, and then the factory needs to deliver, ideally for a concentrated set of very strong customers,” says Bernstein.
In a 2021 deal, Renault took a 20% stake in Verkor and has agreed to buy 12GWh of production annually — enough to make up to 200k cars — from 2025 onwards. Bernstein says that Verkor, through its innovation centre, has already delivered “D-samples” to Renault (the last stage of sample before scaled production), meaning that it has started generating revenue.
On Verkor’s side: Battery Valley
Verkor’s factory sits within “Battery Valley” — an initiative by the Hauts-de-France region to concentrate players from across the battery supply chain in the same place.
It’s a key advantage for the company, says Hartley. “It will give Verkor access to talent, and to parts of the supply chain, like cathode or anode production, as well as recycling,” says Hartley.
It’s a model popularised by China. “They set up zones with all the energy infrastructure, transport infrastructure and almost every step of the supply chain into a small area, so costs are reduced,” explains Hartley.
Northvolt could have benefited from being located next to other players in the battery space, says Hartley. The company had a hard time convincing talent to move to the far north of Sweden, where its main factory was — a problem Verkor could skirt with its position among other companies to draw talent from.
Battery chemistry
Like Northvolt, Verkor is focusing on building a type of battery known as lithium-ion NMC, which uses nickel, manganese and cobalt. NMC batteries can store more energy, but are more expensive and less durable compared to another type of battery called LFP (lithium iron phosphate).
“By focusing on NMC technology, we offer a high-performance battery solution with better recyclability, which will ultimately help improve range while optimising raw material use,” the company told Sifted.
But recent developments to LFP batteries have improved the technology, meaning that it is rapidly growing in popularity.
“LFP batteries are gaining market shares very quickly,” Timothy Bush, a battery analyst at UBS, tells Sifted. “In China, they have already reached an 80% share, and Europe is going to be the next region that I think will easily surpass 60% by 2030.”
“So if [Verkor] are not doing LFP, they’re missing a huge segment of the market… I don’t have very high hopes for any of the European new entrants to succeed.”
Last year, Renault announced that it would incorporate LFP batteries in its vehicles from 2026, alongside NMC, thanks to a partnership with South Korean and Chinese battery manufacturers LG Energy Solution and CATL.
“Our goal remains to establish ourselves as a leading battery manufacturer in Europe and beyond, adapting to evolving market needs and technological advancements,” Verkor told Sifted. A source with direct knowledge confirmed that the company is currently “studying” LFP technology.
‘France is more interventionist’
As Northvolt teetered on the edge of bankruptcy, it petitioned the Swedish state for emergency funding. The company received €60m from the Swedish government, compared to a €902m package offered to it by the German government, and €473m from Canada.
Verkor has already enjoyed more support from the French state, including €659m in grants for its gigafactory.
“Our business model relies on a balanced mix of public and private funding,” the company told Sifted. “Given the high risks involved, private investors alone cannot fund a strategic industry in its early stages, making continued public support essential.”
Reindustrialisation has been one of the key policies implemented by French president Emmanuel Macron since taking office in 2017.
Bernstein says that reindustrialisation is only likely to come into more focus as US president Donald Trump’s administration leads a strong ‘America-first’ reindustrialisation agenda across the Atlantic, creating a ‘game on’ mentality in Europe.
“It’s unfortunate for Northvolt, in terms of their timing, that their loss comes at a time when that national pride about building at home is now coming up,” says Bernstein. “These trends are strong enough to push things along… Verkor very much benefits from that.”
For UBS’s Bush, this won’t be possible without heavily subsidising the industry, especially because of how challenging it is to build battery cells. “These electric vehicles could have 600-800 cells all linked together — and the more cells you add, the lower the defect rate has to be,” he says. “You need to support the battery maker up until the point that they can run with a yield of 95%.”
“That’s a learning curve that European new entrants have to go through, and it’s not reasonable to think they’re going to be profitable while they’re on it.”
Read the orginal article: https://sifted.eu/articles/verkor-northvolt-gigafactory/
