Stefan Lofven visited Northvolt’s base in Skelleftea, near the Arctic Circle, Europe’s first battery gigafactory, just three years ago. He declared that the city was “the future” of the fight against climate change. The Social Democrat said that the work of Northvolt was important for Sweden and for the rest of the world. Arrival of the battery maker was not only supposed be a flagship for Sweden’s green industrial revolution, but also hailed as Europe’s biggest hope against dependence on imported batteries and oil from China.
Northvolt has seen its rapid growth since it was founded in 2016, with the goal of building “the greenest battery on earth”. This has led to billions of dollars being invested and orders coming from some of the biggest automakers, including Volkswagen BMW and Volvo. As Europe struggles to develop an electric car market, a lot of this enthusiasm has started to seem like fantasy. BMW cancelled its $2.5bn deal with Northvolt in June. Last week, Northvolt announced that it would make 1,600 layoffs, and suspend the expansion of its Northvolt Ett plant in Skelleftea, due to a spiraling cashflow crisis.
Northvolt dismissed both rumours of a possible imminent bankruptcy as well as Chinese sabotage. Police are also investigating the death at the Northvolt factory of a man aged 25. They suspect that workplace violations may have been the cause. Northvolters, the employees who are waiting for redundancy information, have expressed deep concern. Meanwhile, workers from outside Sweden face the possibility of being forced to leave Sweden.
Oliver Szabo is the chief security officer of the union IF Metall. He spoke at the Northvolt Labs campus, a research and development facility in Vasteras (central Sweden), where 400 jobs will be lost: “Of Course people are concerned.” People are unsure if they’ll be affected. Szabo stated that Northvolt was a good place to work, despite some problems. However, the leadership could have improved. Szabo said that the death at work in Skelleftea, which was allegedly caused by a worker, was “inacceptable”.
The company told Swedish broadcaster SVT that it is in touch with police and prosecutors, but it would not comment on the preliminary investigation. The Swedish government has decided against a bailout of Northvolt. However, the fate of the company threatens to become a political issue for Sweden and EU.
Ebba busch, the energy and industry minister in Sweden, said that the government is “working actively” on helping Northvolt to continue its operations. She also stated that the Swedish government will be closely following the developments, but that it would not make sense for the state or taxpayers to become a partner.
Ulf Kristersson said that the government is helping find new investors and ownership models. He said they have discussed this with Germany which has also denied a financial lifeline to the company. Mats Engstrom is a senior policy advisor at the European Council on Foreign Relations (ECFR), and he said that the management of the company had “overpromised but underdelivered”. He added that the future of the firm was on a razor’s edge.
He said, “Now, it’s a question of whether Northvolt will survive.” Money is running out fast. It might be possible to save a core business if owners and lenders agree on funding for the near term.
Engstrom warned the consequences of a Northvolt collapse would not be limited to domestic problems. He said that it would be a major political issue for the Swedish, German and European Commission governments who have all supported the plans of the company.
He said that any failure would not be an indicator of a failure of green industrial policy but of the difficulty in large-scale production of battery cells, something Sweden has not had much experience with. Critics claim that the crisis at Northvolt was a “harsh wake-up call” for Sweden’s plans to transition towards a greener economy and the EU green deal.
Christian Sandstrom is a professor at the University of Affarsvarlden and a columnist. He said that Northvolt was in debt for more than 60bn Kronor (£4bn ) and making losses. It also couldn’t increase its production. “At this point, any new funds will go only to creditors.” “The only way to solve this problem is through bankruptcy.”
He believes that the company could declare bankruptcy “anyday now”. Sandstrom believes that the recent opening of many green businesses in Sweden’s north is not promising. Sandstrom said that giving cheap government money to businessmen who claim they can save the world through setting up factories in rural areas where there is a shortage of skilled workers was not a good idea.
Recently, the Swedish government announced the creation of a “green accelerator office” as well as proposals to reduce the time required for businesses to obtain a permit. Kristersson said that Sweden has a huge potential for climate change.
Some have accused the government, however, of being naive. Jonas Algers is a PhD student in the department of environmental and energy system studies at Lund University. He said that everyone likes to think about a startup with a charismatic leader and fancy powerpoints revolutionising a particular sector.
“At the end of it all, building a huge, largest-in Europe plant will require a lot of workers that must be coordinated. It will also require a lot of construction work that has to be done safely, as well as skills and technologies that have to be developed. “None of this is an easy task.”
Algers stated that H2 Green Steel in Boden, northern Sweden had learned from Northvolt’s mistakes. However, there were still issues on the Swedish labour market with large-scale projects such as Northvolt.
He cited issues such as cashflow, workplace injuries, and problems involving subcontractors and machinery. “Policymakers must understand that the Swedish labour model is in bad shape due to loopholes, which are excessive subcontracting, which is undermining Sweden’s capability to build large, advanced industrial projects.”
Matti Kataja is Northvolt’s director of communication and public affairs for the Nordics. He said, “We are focusing our energy and investment into our core business, which is large-scale production of battery cells. The success of the ramp-up in production at Northvolt Ett, in northern Sweden, is crucial for our ability to deliver products and services to customers. Northvolt Ett’s recent production records show that we are moving in the right direction.”
He added, “But it’s not a secret that we’re involved in a funding round.” We have made significant progress in the last two weeks. We hope to be able share more information with you as soon as we can.”
He said that the company was “taking the measures we consider necessary to maintain our leading position as a homegrown cell producer in Europe”, and was “committed” to its founding intent of creating a European base for battery manufacturing.
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