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northvolt, known as the "hope of the whole village" for european power batteries, is on the verge of collapse.

europe's largest local battery company issued a statement on september 23 that it planned to lay off 1,600 people in its home base of sweden, accounting for about one-fifth of its global workforce. it would also suspend the construction of a new manufacturing plant and slow down the research and development department. expansion.

although northvolt claims that the construction of a us$7 billion battery plant in quebec, canada will not be affected, the move has caused dissatisfaction in canada. on september 24, the leader of the opposition party in the quebec provincial assembly of canada called on the coalition avenir quebec government to disclose the agreement with northvolt more transparently.

in order to attract this star company to set up a factory locally, the quebec government has previously promised to provide northvolt with us$2.9 billion in financing. at present, the local government has provided the company with a guaranteed loan of us$240 million and invested us$270 million in its swedish parent company northvolt ab. at present, it seems that these real money investments are likely to be wasted.

as the "first brother" of european batteries, northvolt has been favored and favored by thousands of people, but it is already surrounded by crises and is deeply mired in operational quagmire.

in mid-september, dagbladet, the largest business newspaper in northern europe, reported that northvolt was no longer able to pay wages - the company urgently needed to raise 7.5 billion kronor (approximately us$720 million) to pay wages in september. swedish prime minister ulf kristersson (ulf kristersson) said that sweden has no plan to save northvolt, will not hold ownership of northvolt, and will not provide loans to the company.

in early september, northvolt announced that it would partially reduce production and lay off employees at its flagship factory in response to operational difficulties and declining demand for electric vehicles. the company said it would suspend the production of cathode active materials, a key component of batteries, sell the swedish factory where it had previously planned to produce cathode materials, and find a buyer for its energy storage business in poland.

the loss of core business is before us. on june 20 this year, according to the german "manager magazine" report,bmwwithdrew an electric vehicle battery order worth 2 billion euros (approximately $2.2 billion) from swedish supplier northvolt. according to multiple german media reports, the order was canceled because the swedish startup was unable to fulfill the long-term battery unit supply contract signed in 2020 on time.

northvolt's success is crucial to europe.

the continent has long prided itself on its capabilities in green technologies such as wind power or energy efficiency. however, when it comes to batteries, which are crucial to electrification, the huge subsidies provided by the united states through the inflation reduction act (ira) are exacerbating europe's existential anxiety. european countries are eager to establish their own battery industry chain by supporting northvolt, thereby reducing their dependence on battery manufacturers in china, south korea and other countries.

northvolt was founded in october 2016 and completed its first round of financing of us$12 million in january 2017. later, it signed a long-term battery supply contract with the bmw group worth 2 billion euros in 2020, and signed a battery order worth 14 billion us dollars with the volkswagen group in 2021.

northvolt's rapid growth is inseparable from strong capital support. as a startup, the company has attracted the likes of blackrock,goldman sachsand capital injections from wall street titans such as bailey gifford. january 8, 2024european commissionapproved 902 million euros ($986 million) of german state aid measures to support northvolt in building an electric vehicle battery production plant. this is the first "matching aid" subsidy approved by the eu. on january 16, northvolt also "historically" received a us$5 billion green loan from bank of america and jpmorgan chase to expand the northvolt ett factory in skellefteå, northern sweden. northvolt has raised $15 billion in funding to date.

after receiving large-scale financing and order support, northvolt's development was not smooth. in 2023, its losses surged from us$284 million to us$1.167 billion. the poor financial report data exposed northvolt's insufficient production capacity, low yield rate and multiple technical bottlenecks. for northvolt, which holds an order of us$50 billion, its production capacity is seriously unable to keep up, and its supply can only be continuously delayed, leading to an accelerated loss of orders.

the weakness of europe's local power battery industry chain makes it even worse. compared with countries such as china and south korea, europe has significant gaps in battery materials, technology accumulation and industrial chain integration capabilities.

"carrying out too many businesses and making too many plans at the same time is the main reason why northvolt is in trouble." lars rydahl, a battery expert at ruizide energy consulting company, said that for start-ups trying to expand their scale, it is too difficult to get out of the predicament. it’s difficult, especially for battery supply chain companies that cost a lot of money and have high technical requirements.

foreign media believe that northvolt's development difficulties have cast a shadow on europe's plan to build a sustainable battery supply chain. the company is just a microcosm of the out-of-control technology and costs in building battery supply chains in europe. the various crises exposed by northvolt are common problems in europe's electrification transformation.