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EU battery industry on the brink: Northvolt bankruptcy endangers the future!
Northvolt is failing despite big orders, while European battery production lags behind China's progress. Current challenges and strategic recommendations.
EU battery industry on the brink: Northvolt bankruptcy endangers the future!
The collapse of Swedish battery manufacturer Northvolt highlights the challenges of building a European battery cell industry. The EU's ambitions to counter the dominant Asian market are reflected in the massive orders secured by Northvolt. With $55 billion in orders from well-known European car manufacturers, the company was considered a serious competitor to Chinese manufacturers. However, Northvolt filed for bankruptcy in March 2023 after facing operational setbacks and financial difficulties. The company's losses tripled to $1.03 billion in 2023, which eventually led to drastic job cuts.
The current situation in the European battery industry is worrying. According to an article in the Frankfurter Allgemeine Zeitung There is no consensus among experts from the automotive industry, management consultants and economists about the strategic consequences and recommendations. Achim Kampker from RWTH Aachen emphasizes the importance of battery technology for the competitiveness of Germany and Europe and advocates developing Germany and Europe into innovation and technology locations for traction batteries.
The review of Northvolt
Northvolt began commercial production in 2022 and planned to expand its capacity with new factories in Germany and Canada. Still, problems with the quality of battery cells produced led to cancellations, including a significant €2 billion order from BMW. The difficulties were not attributed solely to Northvolt; the former CEO blamed the entire industry for the crisis. This industry problem is also reflected in the current figures: of 27 announced European projects for battery cell production, only two are in operation, while 18 are considered to have failed.
The challenges go beyond Northvolt. While the European battery industry is struggling significantly, Asian manufacturers like CATL appear to be having significant success. Chinese companies secure raw materials and receive government support for investments, allowing them to offer more competitive prices. Projections show that by 2024, Chinese batteries will be 24% cheaper than US batteries and 33% cheaper than European ones.
Difficult prospects for Europe
The overcapacity in the industry is alarming. Forecasts suggest $1.1 trillion in investment will be required by 2030, while just $242 billion would be enough to meet demand. Stefan Bratzel, Director of the Center Automotive Management, warns against abandoning European ambitions in battery cell production. He sees the danger that Europe will fall even further behind China if suitable solutions are not found more quickly. In this context, the EU Net Zero Industry Act aims to increase battery capacity to 550 GWh by 2030 to ensure competitiveness.
The entire European battery industry is therefore under pressure, especially given the falling demand for electric cars. In addition to Northvolt, the British startup Britishvolt also filed for bankruptcy, while Italy cut funding for a battery factory project. Given the current situation, it remains to be seen whether Europe will be able to overcome the obvious challenges and maintain a place in the global battery market.