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There were high hopes for the Northvolt battery factory in Skellefteå, Sweden
Heavy snowfall melts into thick white clouds in Skellefteå, a riverside town in northern Sweden that is home to 78,000 people.
It is also the location of what was supposed to become Europe’s largest and greenest electric battery factory, powered by the region’s abundance of renewable energy.
Swedish start-up Northvolt opened its flagship production plant here in 2022, after signing multibillion-euro deals with carmakers including BMV, Volkswagen and Nordic truck maker Scania.
But the company ran into significant financial difficulties last year, reporting debts of $5.8 billion (£4.6 billion) in November and filing for bankruptcy in the United States, where it hoped to expand its operations.
Since September, the company has laid off around a quarter of its global workforce, including more than 1,000 in Skellefteå.
“A lot of people have already moved,” says Ghanaian judge Dey-Seshie, 43, who moved to Skellefteå for a job at Northvolt, after studying and working in southern Sweden.
“I have to find a job to be able to extend my work permit. Otherwise, I unfortunately have to leave the country.”
Maddy Savage
Northvolt’s problems caused many people to leave Skellefteå
Many researchers and journalists following Northvolt’s downfall share the view that it was at least partly caused by a global decline in demand for electric vehicles (EVs).
In September, Volvo abandoned its goal of producing only electric vehicles by 2030, arguing that “customers and markets move at different speeds.” Meanwhile, China, the market leader in electric batteries, managed to drive down Northvolt’s prices.
Failure to meet production targets (a key factor in BMW’s withdrawal from a €2 billion deal in June), too rapid expansion and company leadership have also been widely cited as factors fueling the crisis.
“Building batteries is a very complex process. It’s capital intensive, it takes time, and obviously they just didn’t have the right people to run the company,” says Andreas Cervenka, business author and economic commentator for the Swedish daily. Aftonbladet.
At Umeå University, Madeleine Eriksson, a geographer who studies the impact of so-called “green industries,” says Northvolt presented a “save the world” mentality that impressed investors, media and consumers. local politicians.
But this “now or never” approach, she says, obscured the fact that it was a risk-taking start-up that “never stopped attracting investment.”
Northvolt did not respond to multiple requests from the BBC to respond to comments about its downfall or its future plans.
The company has hired German Marcus Dangelmaier, from global electronics company TE Connectivity, to head Northvolt’s operations in Skellefeå, starting in January, in a bid to attract new investment.
Northvolt co-founder and CEO Peter Carlsson – a former Tesla executive – resigned in November.
As the postmortem of the crisis continues, debates are taking place over the potential impact on Sweden’s green ambitions.
Northern Sweden, dubbed the “Nordic Silicon Valley of sustainability” by consultancy firm McKinsey, has quickly gained a global reputation for its new industries designed to accelerate Europe’s green transition.
The region is a hub for biotechnology and renewable energy. Alongside Northvolt, leading companies include Stegra (formerly called H2 Green Steel) and Hybrit, both of which are developing fossil-free fuels using hydrogen.
But Mr Cervenka, the economic commentator, says the fall of Northvolt has damaged Sweden’s “very good brand” in green technology.
“There was a huge opportunity to build this champion and build this Swedish icon, but I think investors who lost money are going to be reluctant to invest again in a similar project in northern Sweden,” says -he.
Some local businesses say the publicity surrounding the Northvolt crisis is already having a negative impact.
“I feel myself, when I travel now – even in the south of Sweden – and abroad, that people really ask me questions,” says Joakim Nordin, CEO of Skellefteå Kraft, a major supplier of hydroelectric and wind energy, which was one of the first investors in Northvolt.
Cleantech Scandinavia
Sustainable industry ‘not doomed’, says Eva Andersson
Based in Malmö, southern Sweden, Cleantech for Nordics is an organization representing a coalition of 15 leading investors in sustainability-focused start-ups.
Here, climate policy analyst Eva Andersson believes the nation’s long legacy as an environmental champion will remain relevant.
“I think it would be presumptuous to say that now we are doomed here in the Nordic countries because a company has gone bankrupt,” she says.
Research from Cleantech for Nordics suggests that there have been more than 200 investments in clean technology projects in Sweden in 2023.
Another study by Dealroom, which gathers data on start-ups, indicates that 74% of all venture capital funding for Swedish start-ups went to so-called impact companies that prioritize environmental sustainability or social, compared to a European average of only 35%.
“Sweden continues to be a significant player in this sector. And I think we can expect it to continue to do so in the future,” Anderson predicts.
Calls are growing for more state support to help Sweden maintain its position. The Swedish government has refused to bail out Northvolt, suggesting that all startups – sustainable or not – should be subject to market forces rather than saved by taxpayers. But as other parts of the world ramp up production of batteries and other industries reducing their carbon emissions, the decision has faced backlash.
“The US and China have massive support plans in place for green industry, and they are definitely catching up and overtaking in some sectors, so this is certainly a threat to be reckoned with,” says Andersson.
According to a study by international consultancy McKinsey, only 3% of global battery cell production currently takes place in Europe, with Asian companies leading the market.
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Northvolt “is not a Swedish crisis”, says Business Minister Ebba Busch
Sweden’s Minister of Energy, Trade and Industry, Ebba Busch, says the solution is more support from the EU rather than funding from individual governments.
Last month, she told Swedish television that the situation at Northvolt was “not a Swedish crisis” but rather a reflection of a European-wide challenge to competitiveness in the electric battery sector.
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. The right-wing coalition, which came to power in 2022, has cut taxes on gasoline and diesel and removed subsidies for electric vehicles.
“This is a very politically sensitive area,” says journalist Cervenka. “The Swedish government is actually being criticized internationally for not meeting its climate obligations. And this stands in stark contrast to Sweden’s image as a pioneer.”
The BBC contacted Busch’s media team, but did not obtain an interview.
Skellefteå Kraft
Joakim Nordin hopes Northvolt’s problems will only be an ‘obstacle’
Back in Skellefteå, where it gets dark just after lunch, Joachim Nordin prepares to return home in the snow.
He says there is strong industrial will for Sweden to remain a model for green technology, even if policymakers are “not as ambitious” as previous administrations.
The criteria that prompted Northvolt to establish its first factory in Skellefteå will also attract other major global players to the region, according to the energy company’s CEO.
“The energy here is almost 100% renewable… and that’s quite unique when compared to the rest of Europe. But on top of that, we are among the cheapest places in the world for electricity prices. So if you combine those two things, it’s a huge opportunity.
Skellefeå Kraft recently announced a collaboration with Dutch oil company Sky NRG. Their ambition is to open a large factory producing non-fossil aircraft fuel (produced from hydrogen combined with carbon dioxide captured from biogenic sources) by 2030.
“The publicity around Northvolt is of course not helping now. But I hope it’s just something that will be remembered as a small bump in the road, when we look back on it in 10 years,” says Mr. Nordin.
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