The West outsourced manufacturing, innovation in manufacturing and doing research for this innovation to Asia. What do you want now? Batteries and electric cars? You are funny and out of charge...

"Northvolt was one of the world's most valuable battery startups. Now it has run out of charge.

Over the past week, the Swedish company filed for bankruptcy in the U.S. and said its co-founder was stepping down as chief executive, after a turbulent year of production problems and job cuts.

The move marks a stark change in fortunes for a company once vaunted as Europe's best hope for competing with China's dominant battery makers. Northvolt's collapse also underscores the difficulty Western companies face in establishing a foothold in the industry.

Northvolt has struggled with a challenging market for electric vehicles, difficulties scaling up and management missteps, departing Chief Executive Peter Carlsson said on Friday. Filing for chapter 11 bankruptcy allows the unprofitable company to access new sources of financing while it restructures.

"We've now stabilized, we're getting predictable, we're delivering," said Carlsson, who remains on the company's board. "You just need to have the time to get it there."

Founded by Carlsson and another former Tesla executive in 2016, Northvolt's goal was to become a reliable European source of battery cells to help power the region's transition to EVs. Governments and investors were eager to support a homegrown player that could reduce reliance on China.

By the end of 2023, Northvolt had secured about $15 billion in debt, equity and grants, while its order book had swelled to more than $50 billion. German auto giant Volkswagen was among the top backers with a 21% stake, while Goldman Sachs held about 19% of Northvolt's shares.

Northvolt planned to build new factories in Canada and Germany, backed by billions of dollars in subsidies, and was set to expand its main facility in Skelleftea, a Swedish city near the Arctic Circle.

But Northvolt reported losses of roughly $1.2 billion, with revenue of just $128 million for 2023.

"I should have probably pulled the brake earlier on some of the expansion paths," Carlsson said on Friday.

Northvolt's problems became more evident this year. In March, truck maker Scania said it was behind on its electrification plans, telling a Swedish newspaper that the battery maker hadn't kept up with deliveries. In June, BMW pulled a roughly $2 billion contract with Northvolt.

Northvolt said the BMW contract represented a small portion of its overall order book. But the setback marked a turning point. Since June, Northvolt has cut a quarter of its Swedish workforce and suspended an expansion project at Skelleftea. It scrapped plans for a second factory in Sweden and shut a subsidiary in California.

Carmaker Volvo said in October that it would acquire Northvolt's shares in a joint venture after the startup failed to meet its financing obligations.

In recent weeks, Northvolt has held talks with investors and lenders to secure funding to continue operations.

Northvolt's chapter 11 filing will give it access to about $245 million, though the company will need as much as $1.2 billion to pursue an updated business plan after its restructuring, Carlsson said.

Northvolt's failure comes at a turbulent time for the European car industry. Consumer demand for EVs has weakened, leading some automakers to downsize or delay projects.

The company's expansion plans had also drawn criticism from analysts who say it sought to move too quickly.

"The founders had no experience of building a process industry and they didn't want to start with a small scale," said Magnus Henrekson, a senior research fellow with Sweden's Research Institute of Industrial Economics.

Making battery cells is complex and expensive. New factories can take years to increase production and often have high scrap rates because of problems during the production process.

One of the hurdles Northvolt faced involved equipment it brought in from Asian suppliers. The company was the first Western customer for some suppliers, Carlsson said, meaning it took longer to get the equipment fully up and running.

Northvolt has also faced safety concerns. Swedish prosecutors opened an investigation into the death of a worker following an explosion last year at its main factory.

A spokesman for Northvolt said its safety record is comparable to that of other Swedish companies. "We are improving and are aiming for even better results," he said.

Northvolt's experience shows how other Western battery companies will also likely face challenges, said Greger Ledung, a battery-research expert with the Swedish Energy Agency. 

If the company fails, others will "need to work much harder to do the same thing again," Ledung said. European investors and governments should have more patience for how difficult it is to build a new industry, he added.

Despite the various challenges, Carlsson said he remains optimistic that Northvolt still has a future.

"Very few doubt the underlying trend of electrification and the fact that we need to continue decarbonizing," he said." [1]

You are decarbonized. Soon you will be taking care of goats.  

1. Battery Firm Northvolt Files for Bankruptcy --- Swedish company was caught in a financing crunch; CEO steps down. Kim Mackrael.  Wall Street Journal, Eastern edition; New York, N.Y.. 25 Nov 2024: B.4.