Northvolt

What did it do?

Northvolt was a Stockholm-based company, founded in 2015 by two former Tesla executives, that developed and manufactured lithium-ion batteries for electric vehicles. It built its first large factory, Northvolt Ett, in Skellefteå in northern Sweden, opened a plant in Poland and planned new factories in Germany and Canada. The company was seen as the symbol of Europe's answer to the dominance of Tesla and Asian manufacturers in the battery market.

Why did it shut down?

The Skellefteå factory could not ramp production up to the planned rate; according to a book by a former employee, the first cell tests in 2022 showed unacceptable defect rates. In June 2024 BMW cancelled a €2 billion contract because Northvolt could not deliver on time. In September 2024 the company announced layoffs affecting 1,600 people and a halt to its expansion plans. On 21 November 2024 it filed for Chapter 11 in the US, stating that it had only a week's worth of cash and $5.8 billion of debt. With no new financing found, it filed for bankruptcy in Sweden on 12 March 2025.

The story

At the end of December 2021, in a vast factory in Skellefteå in northern Sweden with 500 employees, the first prismatic battery cells came off the line. Seen as proof that Europe could make its own batteries for the shift to electric vehicles, it was Northvolt's finest hour. A little over three years later the company was going through the biggest bankruptcy in modern Swedish industrial history.

Northvolt was founded in 2015 as SGF Energy by Peter Carlsson and Paolo Cerruti, who had worked at Tesla in supply chain and operations planning; it took its current name in 2017. Loans came from the European Investment Bank, Volkswagen bought a 20 per cent stake for €900 million in 2019, and BMW, Goldman Sachs and Folksam joined the investors. In 2020 it signed a €2 billion battery supply deal with BMW. In August 2023 it raised $1.2 billion alongside its plan for a factory in Canada, and in January 2024 it raised $5 billion in green loans. The company had opened a plant in Poland and begun building new factories in Germany and Canada.

Growth on paper, however, did not translate to the production line. According to a former employee's book published in 2025, defect rates in the first cell tests in 2022 were unacceptable; humidity control, automation failures and parts delays were disrupting production. According to an internal report uncovered by Dagens industri, the company lost around $1 billion in the first nine months of 2023. In June 2024 BMW cancelled the €2 billion contract because deliveries could not be made on time.

In September 2024 layoffs affecting 1,600 people were announced. On 21 November 2024 Northvolt filed for Chapter 11 in the US, stating that it had just $30 million in cash, enough for a single week, and $5.8 billion of debt; founding CEO Carlsson resigned the next day, saying the company needed at least $1 billion in the long term. That money was never found. On 12 March 2025 it filed for bankruptcy in Sweden, the trustee halted the limited production entirely in June 2025, and a large part of the facilities was sold to Lyten of the US.

Northvolt became an expensive lesson that capital cannot replace manufacturing capability. Billions of dollars and powerful customers could not solve the problem of quickly producing quality cells in the first factory.

Lessons for founders

• Building a factory and getting quality product out of it quickly are different skills; prove the yield of the first line before moving on to new capacity.
• A growth plan tied to a single large customer's contract collapses overnight when the delivery schedule slips.
• Hiding production problems from investors and customers does not buy time; sharing bad news early widens your options for fixing it.

Sources

1. Northvolt (Wikipedia)
2. Sweden's Northvolt files for bankruptcy, in blow to Europe's EV ambitions (Reuters, 2024-11-21)
3. BMW cancels $2 bln battery cells contract with Northvolt (Reuters, 2024-06-20)
4. Sweden's green industry hopes hit by Northvolt woes (BBC News, 2025-01-03)

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