The sunset of Northvolt
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Having potentially raised $15bn in various grants, incentives and investment to provide battery production in Europe, Northvolt has approximately 6,600 employees across seven countries. It now faces a fire sale of its assets as it files for bankruptcy in Sweden.
The collapse of the Northvolt puts battery gigafactories, recycling plants, pack assembly plants and battery cell technologies all up for sale. Whether these remain as part of the battery supply chain or are repurposed as AI data centres powered by hydroelectric energy will depend on the negotiations with potential buyers over the next few weeks.
- Northvolt sells indistrial division for $6m as it files for bankruptcy
- Our articles on Northvolt over the last nine years are here
The origins of Northvolt can be traced back to a simple but ambitious idea: to create a sustainable battery industry in Europe. This idea first came to Peter Carlsson and Paolo Cerruti in 2015 while they worked together in supply chain and operations for Tesla.
At the time, electric vehicles were becoming a competitive product and electrification was sweeping across industries. But there was no meaningful battery manufacturing presence in Europe.
Instead, the industry relied on production and materials from Asia, which had serious environmental and supply chain consequences. To address these issues, Carlsson and Cerruti believed that they could bring battery manufacturing to Europe and, in turn, revolutionize the industry with new science and environmentally clean products.
At that time, however, Peter and Paolo had nothing more than their industry experience and bold vision. Fortunately, they were not alone in their ambitions. As it turns out, some 8,600km away in Stockholm, Carl-Erik Lagercrantz, chairman of the battery company Incell International, had a similar idea. Lagercrantz had been working to create a world-class battery application company that could help combat the industry’s reliance on Asian battery cells by sourcing and producing batteries in Europe.
In 2015, Lagercrantz reached out to Carlsson to discuss his vision. That call led to several meetings in Stockholm where they discussed the future of the battery industry.
As the idea took hold, the small group began work on a pre-study to explore whether a gigafactory—a large-scale manufacturing facility for electric vehicle batteries and other components—could be viable in Europe. Over the next few months, Carlsson and Cerruti met with potential customers, suppliers, investors, government representatives, and other stakeholders to explore such a business
One evening in late 2016, the decision was made to bring the vision of building a European battery gigafactory to life. Operating under the name SGF Energy AB, the small group gradually began to grow into a hand-picked team of innovative experts committed to changing the battery industry. As the team grew, the staff rented a small office space in Stockholm, Sweden, to serve as the base for operations.
After assembling their IKEA desks, the team then tackled the slightly more difficult project of crafting what would become Northvolt’s business strategy and plan and announced its plans for 40GWh of production on March 7, 2017.
Because Europe’s battery industry was relatively immature, Northvolt engaged in a global search for talent. The Company brought in cell designers from Asia and data model and battery system specialists from Silicon Valley, changing its name to Northvolt AB later in the year.
After building its team, Northvolt turned to its next top priority: selecting a location in the Nordics for both its first gigafactory and a research and development facility to support battery technology advancements. Forty municipalities throughout Sweden and Finland indicated interest. Ultimately, the team narrowed the selection down to two cities in Sweden: Skellefteå and Västerås.
Although Northvolt initially planned to house both its gigafactory and research and development center in the same location, the team decided to take advantage of the benefits of both locations.
Northvolt would establish its research and development centre, Northvolt Labs, in Västerås, near Northvolt’s headquarters in Stockholm and existing industrial infrastructure. The first gigafactory, Northvolt Ett (or “one” in Swedish) would be in Skellefteå, an industrial city in the north of Sweden on the Baltic Sea that, among other things, provided access to hydropower sources, maintained an industrial grid that could support the robust demands of a gigafactory, and offered generous government support.
Attention then changes to industrial partnerships. In September 2017, Northvolt made a significant breakthrough when it secured its first partnership with Swedish-Swiss technology company ABB. Northvolt also secured valuable partnerships with wind power firm Vestas Wind Systems, Swedish truck maker Scania, German technology company Siemens and car maker BMW.
Northvolt was also selected by Epiroc as the supplier of battery systems for their fleet of electrified underground mining machines.
Just as support from European industrial partners was crucial, so was political backing. Northvolt caught the attention of European political actors who hoped to reduce Europe’s reliance on Asian battery manufacturers. In February 2018, the European Investment Bank approved a loan for the establishment of Northvolt Labs. The Swedish Energy Agency also provided a grant to support Northvolt Labs.
Northvolt signs deal for sustainable lignin carbon battery anodes
In spring 2018, Northvolt broke ground on its first facility—Northvolt Labs in Västerås.
By December 2019, Northvolt Labs was online designing and developing battery cells and delivered cell samples to customers and expanded its head count. In December 2021, Northvolt Labs developed its first lithium-ion battery cell.
Just two years later, in November 2023, Northvolt Labs launched a state-of-the-art sodium-ion battery technology.
Although Northvolt Labs was the Company’s first operational location, the heart of Northvolt’s vision was Northvolt Ett, Europe’s first homegrown gigafactory. In June 2019, as ground preparations for the gigafactory concluded, Northvolt completed an equity capital raise of $1 billion for the development of Northvolt Ett.
At that point in time, Northvolt had secured supply agreements amounting to a combined order value of over $13 billion through 2030. As construction continued, in July 2020, Northvolt raised an additional $1.6 billion from a consortium of commercial banks, pension funds, and public institutions to further develop Northvolt Ett and meet the growing demands of its customers.
Northvolt Ett officially commenced operations in late 2021, and in December of that year, it assembled its first lithium-ion battery cell shortly after its development at Northvolt Labs.
Since then, Northvolt Ett has continued to increase its production capacity, hitting a high of 60,000 battery cells produced per week in September 2024. Currently, Northvolt Ett has capacity to produce 300,000 batteries per year.
In parallel, the Company continued its expansion plans and investment in new technology. In October 2018, Northvolt established a facility in Poland—“Northvolt Dwa” (or “two” in Polish)—to assemble battery modules and packs. In 2023, the Company opened Northvolt Dwa ESS, a highly automated factory for energy storage systems, alongside an industrialization and engineering research and development centre.
In December 2019, Northvolt launched its recycling program—“Revolt”—to execute on its strategy of becoming a leader in sustainable battery manufacturing. In June 2020, the Company also announced its Hydrovolt joint venture in partnership with Norwegian aluminium manufacturer, Norsk Hydro ASA to establish a battery recycling facility in Fredrikstad, Norway.
The company also announced plans for Aurora Lithium, a joint venture with Galp Energia for the conversion of lithium-containing materials into battery-grade lithium hydroxide at Europe’s largest, most sustainable lithium conversion plan in Setúbal, Portugal.
It even purchased a closed paper mill in Borlänge, Sweden to repurpose it into a new gigafactory, Northvolt Fem.
In addition to its active operations, the groundwork for future expansion was being laid. In March 2022, Northvolt announced plans to build a gigafactory in Heide, Germany. Northvolt Drei (or “three” in German) was supported with over €1.3 billion in convertible instruments and grants from German governmental institutions. The site is fully permitted, with all necessary regulatory approvals secured
Although Northvolt Drei is in the early phases of construction, it currently holds approximately $375 million in cash and remains an essential component of Northvolt’s future growth plan.
In September 2023, Northvolt announced its first expansion outside of Europe into North America: a gigafactory near Montréal, Québec, Northvolt Six.
Like Northvolt Drei, Northvolt Six was planned with significant local government support and has received all necessary regulatory approvals to begin construction. Shortly after Northvolt’s entry into Canada, the project secured approximately $5.8 billion in federal and provincial commitments comprised of a blend of grants, debt, and convertible instruments. Northvolt Six currently holds approximately $240 million in cash
In 2022, Northvolt became the first European battery company to make commercial shipments to a carmaker, marking a significant milestone in the continent’s pursuit of battery independence. The company has served BMW, Audi AG, Porsche AG, Scania, Volvo Car and Polestar.
Revenues generated have been invested back into the Company to support its operations and growth. And despite its significant investments, Northvolt has faced production shortfalls.
Northvolt’s capital structure and business plan were based on the assumption that the electric vehicle industry would continue its pattern of consistent growth. In 2023, however, electric vehicle sales began slumping due to, among other things, economic uncertainties and operational challenges, which impacted battery manufacturers worldwide as customers cancelled contracts, reduced orders, and renegotiated terms. It also admitted to delays at Northvolt Ett, an inability to satisfy certain customer requirements.
At the same time established Asian manufacturers continued scaling up production and pushing down battery prices; this resulted in further stress on newer battery manufacturers like Northvolt, leading to a $1.2 billion net loss in 2023.
To protect its core business, the Company made the difficult decision to streamline certain operations and narrow its focus to the development of battery technology at Northvolt Labs and the manufacturing of battery cells at Northvolt Ett. As the challenges continued to mount, Northvolt recognized that additional liquidity would be necessary to support its go-forward operations.
As a starting point, Northvolt turned to its existing shareholders for $154 million shareholder bridge facility in August 2024. This bridge financing, though necessary, only provided temporary liquidity support in light of the company’s high operational costs.
As the company’s financial picture worsened, the attitudes of certain key stakeholders changed, and the company turned to Chapter 11 restructuring in the US, supported by Scania. This could have delivered $230m to keep the company running.
However, the company ended up with $30 million of available cash on hand, which supports operations for just one week.
Winding down
Northvolt has operations at four locations across Europe: Northvolt Ett, Northvolt Labs, Northvolt Dwa, and Hydrovolt. The joint venture with Volkswagen was terminated in 2021. Northvolt Ett has grown to over 3,500 employees, while Northvolt Labs has over 1,000 employees. Northvolt Dwa Industrial has been sold as Northvolt Dwa ESS is wound down.
The company had four projects under development: Revolt Ett, Northvolt Drei, Northvolt Six, and Aurora Lithium.
Part of the Revolt Ett recycling capabilities are currently operational. Once fully operational, the facility is intended to recover valuable materials from end-of-life batteries and then reintegrate those materials into Northvolt’s battery production. A sale process is underway for Northvolt Revolt AB, including Revolt Ett.
Northvolt Drei in Germany is expected to create approximately 3,000 jobs and become a crucial part of the European battery supply chain.
Northvolt Six still has plans to become Canada’s first fully-integrated battery manufacturing plant, combining the production of cathode active materials, battery cell assembly, and battery recycling within a single site.
Aurora Lithium in Portugal was originally scheduled to commence operations in early 2026, the timeline for Aurora Lithium has been delayed due in part to complexities involved in the project.
What will happen to the lithium ion, LFP, sodium ion and lithium metal battery cells that Northvolt developed remains to be seen. These are integral to the battery gigafactories, but buyers will have their own battery technologies to build in those factories. Unless they get turned in AI datacentres, which is all too possible.
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