Mass Layoffs, Factory Closures: Europe's Largest "Scam" Company Collapses

Europe's largest "fraudulent company" has collapsed.

Established in less than 8 years, it has raised a total of 15 billion US dollars, equivalent to over 100 billion yuan, making it the European startup company with the most financing. However, it is a thoroughly "fraudulent company" that has deceived various investment institutions, as well as governments and major companies across Europe.

This company is the well-known Swedish battery manufacturer - Northvolt.

Most people may not have heard of this company, but it is closely related to each of us and even concerns the fate of the nation. Understanding this company will clarify why China's power battery companies and the entire lithium battery industry chain are far ahead globally, and there will no longer be such remarks as "it's just a low-end factory making batteries."

At the end of 2016, two executives who left Tesla founded Northvolt. Because it was born with a "golden key," it has been regarded as "the hope of the whole village" by Europe from the beginning.

Thus, with funding, policies, and orders, Europe has tried to achieve self-sufficiency in power batteries and offset the influence from China by supporting Northvolt.

How much support has Northvolt received?

In terms of financing, the most recent financing occurred in January 2024, when Northvolt completed a financing round of up to 5 billion US dollars, with a total financing of over 15 billion US dollars in just 7 years; in terms of policy, the European Union specifically established a battery industry alliance working group to serve battery companies such as Northvolt. Whenever the company wants to build a factory or R&D base, it will receive special funding subsidies and policy support; in terms of orders, represented by BMW, including Volkswagen, Volvo and other car companies have all placed orders, Northvolt has more than 55 billion US dollars in intended orders.

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However, Northvolt has messed up.

In June of this year, BMW canceled the contract with Northvolt worth more than 2 billion euros. According to industry insiders, the reason BMW decided to terminate the contract is that Northvolt's battery technology is two years behind, which means that even if they can deliver, these batteries are already outdated.Additionally, there is the issue of production capacity.

According to the earliest estimates, Northvolt planned to achieve a production capacity of 150GWh by 2030, capturing 25% of the European market share. However, the reality is that the first battery factory, which was originally scheduled to reach a designed production capacity of 16GWh by 2023, actually shipped less than 1GWh, with an extremely low capacity utilization rate.

In July of this year, Northvolt announced its financial performance for the fiscal year of 2023. According to the financial report, the company's operating revenue was $128 million, with a net loss of $1.167 billion. Note that while operating revenue increased by 20%, the net loss actually tripled.

Faced with huge losses, Northvolt is laying off employees and closing factories to cut costs. Recently, according to reports from authoritative European media, Northvolt has had to urgently raise funds even for the salaries of September and needs to lay off about 20% of its global workforce.

Northvolt originally intended to first surpass CATL in the European market and then challenge its global market position. However, given the current situation, it seems that the company is struggling just to survive.

Where exactly does Northvolt's problem lie?

Firstly, there is a lack of talent, and secondly, there is a lack of a complete industrial chain!

As we all know, battery materials include cathode materials, anode materials, electrolytes, separators, and so on, but these fields are almost blank across Europe. With no other choice, Northvolt can only opt for self-research. The problem is that the entire battery industry chain involves too many links, and it is simply impossible to cover everything.

Regarding this point, CATL's chairman, Zeng Yuqun, explained in an interview:

"European battery companies first have issues with battery design, secondly, the process flow is incorrect, and thirdly, there are problems with the equipment."In summary, to put it in a nutshell, every aspect is flawed.

Note that this is merely the production aspect. Even if Northvolt manages to address the aforementioned issues in the future, and assuming that they technologically catch up, there is still a significant challenge that is hard to overcome: cost. On this point, the photovoltaic industry chain has already demonstrated that the leading advantage of China's manufacturing industry is enormous.

We can assert the following:

Due to disadvantages in technology, production capacity, and cost, European battery companies, represented by Northvolt, have already lost this race.

Currently, the competition in the global power battery market is primarily between China and South Korea. On the South Korean side, represented by LG Energy Solution, Samsung SDI, and SK, they are accelerating the process of building factories in Europe; domestically, CATL's factory in Germany has already started production, and the construction of the Hungarian factory is in full swing. Additionally, companies such as Contemporary Amperex Technology Co. Limited (CATL), Guoxuan High-Tech, Farasis Energy, and EVE Energy are also speeding up their expansion into Europe.

Therefore, this is a competition that concerns the fate of nations.