Northvolt, once seen as Europe’s best hope for a strong battery industry, has filed for bankruptcy in Sweden. The company, which aimed to create the “world’s greenest battery,” struggled to meet its ambitious goals. This marks a major blow to Europe’s efforts to compete in the global electric vehicle (EV) battery market.
Why Did Northvolt Fail?
Northvolt faced many challenges that led to its downfall. Here they are:
- Production Problems: The company failed to scale up production at its Skellefteå gigafactory as planned. Instead of reaching 16 GWh, it only managed 1 GWh. This shortfall led BMW to cancel a $2 billion battery supply contract in June 2024.
- Financial Struggles: Northvolt raised over $14 billion, including a $5 billion loan for factory expansion. However, rising costs and no new investment made it hard to keep operations going.
- Changing Market Conditions: Demand for EVs in Europe has slowed. S&P Global recently lowered its 2025 EV market share forecast for Europe from 27% to 21%. As carmakers rethink their electrification plans, the demand for batteries has dropped.
- Geopolitical and Economic Factors: The company faced high capital costs, geopolitical instability, and supply chain disruptions. These issues created additional hurdles for the company.
- Leadership Challenges: The company lost investor confidence after its chairman stepped down due to health reasons, weakening its leadership structure.

What Happens to Northvolt’s Assets?
A Swedish court-appointed trustee will handle the bankruptcy process. The court will decide how to sell Northvolt’s business and settle its debts. As of now, no buyers have come forward to take over the company’s factories or assets.
Northvolt’s Swedish workforce of 5,000 people, mostly based in Skellefteå, faces uncertainty. The Swedish engineering trade union expects at least 650 of its members to lose their jobs.
Northvolt’s bankruptcy has hit Skellefteå hard. This small town in northern Sweden is home to its main factory. Dubbed the “Northvolt-effect,” the company’s presence revitalized the town, which invested heavily in infrastructure due to the economic boom.
The battery maker was the largest employer in the town with 40,000 residents, with 3,000 workers. The bankruptcy threatens local economic stability, prompting authorities to seek government support.
Sweden’s Deputy Prime Minister, Ebba Busch, has urged the European Union to amend its clean-tech funding rules to help Northvolt attract a new owner. She stressed that expanding EU funding to current battery makers is vital for Northvolt’s survival. Busch further noted that:
“If the EU Commission keeps on only supporting newcomers within the battery sector, then the ‘clean industrial deal’ on European soil will be in the hands of China… [the region’s strong dependence on China for green tech import].”
Impact on Europe’s Battery Industry
Northvolt’s collapse is a major setback for Europe’s battery sector. The company had been a key player in Europe’s gigafactory plans, with two major projects:
- Northvolt Ett – A factory in Skellefteå, Sweden, which was Europe’s third-largest gigafactory by capacity in 2024.
- Northvolt Drei – A planned gigafactory in Germany with a 60 GWh capacity.



Northvolt’s factories will make up 13% of Europe’s battery production planned for 2030. Its bankruptcy may boost Europe’s dependence on Asian battery makers. This includes LG Energy Solution from South Korea and China’s CATL, the biggest battery producers in Europe.
Let’s look at the bigger picture and see how this failure fits in.
Global and European Battery Market Trends
The global battery market is growing fast. This growth is mainly due to more people buying EVs.
In 2024, worldwide EV sales increased by 25%, reaching 17 million units. Global annual battery demand has now exceeded one terawatt-hour (TWh) for the first time. EVs make up 85% of this demand.



One key development was the decline of average EV battery pack prices below $100 per kilowatt-hour (kWh). This is considered a crucial milestone for cost parity between EVs and gasoline cars.
The price drop was driven by lower raw material costs—lithium prices have fallen 85% since their 2022 peak—along with advances in battery technology and manufacturing efficiencies.
China continues to dominate global battery production, accounting for over 75% of all batteries sold in 2024. Chinese battery prices dropped by almost 30% last year. They are over 30% cheaper than European batteries and 20% cheaper than North American ones.
Lessons from Northvolt’s Bankruptcy: What This Failure Means for the Industry
There are three key lessons to be learned from the Swedish battery maker that other companies must take note:
Ambition vs. Reality. Northvolt wanted to manage many parts of the battery supply chain. However, this was too hard for a startup. Other European battery makers are now avoiding this model.
Need for Stable Investment. Building a battery industry requires a long-term financial commitment. Northvolt’s failure shows the need for strong, consistent backing from investors and governments.
Market Demand Matters. The slowdown in EV sales made Northvolt’s plans unsustainable. Companies must be flexible and adapt to changing market conditions.
What Comes Next After Northvolt?
Northvolt’s bankruptcy is a significant blow to Europe’s green energy ambitions. It underscores the difficulty of building a homegrown battery industry. While this is a setback, it also offers lessons for future companies.
Despite Northvolt’s failure, Europe still aims to build a strong battery sector. Other companies may attempt to fill the gap, but they will need careful planning and stable financial support.
Europe must rethink its battery strategy, strengthen investments, and develop partnerships to remain competitive against China and South Korea. The future of Europe’s battery sector will depend on strategic planning, supportive policies, and technological innovation.