Swedish green industry hopes hit by Northvolt woes

Heavy snow blended with thick white clouds in Skellefteå, a riverside city in northern Sweden with 78,000 residents.

It’s also home to Europe’s largest and greenest battery factory, powered by the region’s abundant renewable energy.

Swedish start-up Northvolt opened a flagship production plant here in 2022 after signing multi-billion-euro contracts with carmakers including BMV, Volkswagen and Nordic truck maker Scania.

But the company ran into major financial problems last year, reporting debts of $5.8bn (£4.6bn) in November and filing for bankruptcy in the US, where it has been looking to expand.

The company has laid off about a quarter of its global workforce since September, including more than 1,000 employees in Skellefteå.

“A lot of people have moved away,” said Judge Dey-Seshie, 43, of Garner. He studied and worked in southern Sweden before moving to Skellefteå to work at Northvolt.

“I need to find a job to extend my work permit. Otherwise, I will have to leave the country, unfortunately.”

Many researchers and journalists tracking Northvolt's downfall believe it was caused at least in part by falling global demand for electric vehicles (EVs).

September Volvo abandons target Only electric cars will be produced by 2030, citing “customers and markets are evolving at different speeds”. At the same time, China, as the leader in the battery market, has been able to lower Northvolt's prices.

Failure to meet production targets – a key factor in BMW's exit from a 2 billion euro deal in June – rapid expansion and the company's leadership are also widely seen as factors exacerbating the crisis.

“Making batteries is a very complex process. It takes a lot of money, it takes time, and they clearly don't have the right people to run the company,” Andreas Chervenka, business writer and economic commentator at Svenska Dagbladet Cervenka) means Afton newspaper.

Madeleine Eriksson, a geographer at Umea University who studies the impact of so-called “green industry”, said Northvolt displayed a “save the world mentality” that impressed investors, media and local politicians. impression.

But she believes this “now or never” approach masks the fact that this is a risky start-up that “never finished attracting investment.”

Northvolt did not respond to repeated requests from the BBC for comment about its collapse or future plans.

The company has hired German Marcus Dangelmaier from global electronics company TE Connectivity to run Northvolt's operations in Selefeo from January in a bid to attract new investment.

Northvolt co-founder and CEO Peter Carlsson, a former Tesla executive, resigned in November.

As the crisis postmortem continues, there is debate over the potential impact of the crisis on Sweden's green ambitions.

Northern Sweden, known as the “Nordic Silicon Valley of Sustainable Development” McKinsey & Companyquickly gained a global reputation for new industries aimed at fast-tracking Europe's green transition.

The region is a center for biotechnology and renewable energy. In addition to Northvolt, high-profile companies include Stegra (formerly H2 Green Steel) and Hybrit, both of which are using hydrogen to develop fossil-free steel.

But Mr Cervenka, an economic commentator, believes Nosvod's collapse has damaged Sweden's “very good brand” in green technology.

“There is a huge opportunity to build this champion, to build this Swedish landmark, but I think investors who have lost money will be hesitant to invest in similar projects in northern Sweden again,” he said.

Some local businesses say the publicity surrounding the Northvolt crisis has had a negative impact.

Joakim Nordin, CEO of Skellefteå Kraft, said: “When I travel now, even to southern Sweden and even abroad, I feel that people are really there Ask me a question.” The company, a major hydro and wind energy supplier, was an early investor in Northvolt.

Cleantech for Nordics, headquartered in Malmö, southern Sweden, is an organization made up of a consortium of 15 major investors in sustainability-focused startups.

Climate policy analyst Eva Andersson believes the United States' long tradition as an environmental champion remains relevant.

“I think it's presumptuous to say, well, now we are doomed in Northern Europe because one company failed,” she argued.

Nordic Research in Clean Technology It is expected that by 2023, more than 200 clean technology projects will be invested in Sweden.

Another study from Dealroom74% of all venture capital funding for Swedish startups goes to so-called impact companies that prioritize environmental or social sustainability, compared with the European average of just 35%, according to data collected on startups.

“Sweden continues to excel in this area. I think we can expect it to continue to do so as well,” Andersen predicted.

There are growing calls for increased state support to help Sweden maintain its status. The Swedish government has refused to bail out Northvolt and has suggested that all start-ups – whether sustainable or not – should be subject to market forces rather than being bailed out by taxpayers. But the decision has been met with backlash as the rest of the world ramps up efforts in battery production and other carbon-reducing industries.

“The United States and China have large-scale support plans for the green industry, and they are certainly catching up and surpassing them in some areas. So this is definitely a threat that cannot be ignored,” Anderson believes.

Europe currently accounts for only 3% of global battery production – According to research International consulting firm McKinsey – Asian companies lead the market.

Swedish Energy, Commerce and Industry Minister Ebba Busch believes the answer is more support from the EU rather than funding from individual governments.

last month she tell swedish tv The situation at Northvolt is “not a Swedish crisis” but reflects the challenges facing Europe as a whole in terms of competitiveness in the battery industry.

But while the government insists it wants Sweden to play a key role in Europe's battery industry and the wider green transition, it has been accused of sending mixed messages. Right-wing coalition to come to power in 2022 cut gas tax and diesel, as well as Eliminate electric vehicle subsidies.

“This is a very politically sensitive area,” journalist Chervenka said. “The Swedish government has actually come under international criticism for not meeting its climate obligations. This is in stark contrast to Sweden's image as a pioneer.”

The BBC contacted Bush's media team but was not able to secure an interview.

Back in Skellefteå, it was getting dark after lunch, and Joachim Nordin was preparing to go home in the snow.

He said that although policymakers were “less ambitious than previous governments”, Sweden's industry had a strong will to continue to be a role model for green technology.

The energy company's chief executive said the standards that attracted Northvolt to build its first factory in Skellefteå would also attract other major global players to the region.

“It's almost 100% renewable energy here… it's very unique if you compare it to the rest of Europe. But most importantly we have one of the cheapest electricity prices in the world . So if you combine those two things, it's a huge opportunity.”

Skellefeå Kraft recently announced a partnership with Dutch fuel company Sky NRG. Their goal is to open a large-scale factory by 2030 to produce fossil-free aircraft fuel (produced using hydrogen combined with carbon dioxide captured from biological sources).

“Of course the hype surrounding Northvolt isn't helpful now. But I hope that when we look back on this in 10 years it's just a small bump in the road,” Mr Nordin said.