Illustration: Xia Qing/GT
Northvolt, the Swedish manufacturer of battery cells for electric vehicles (EVs), has filed for Chapter 11 bankruptcy protection in the US, according to Reuters. The report highlights the swift downfall of Northvolt, which, in a matter of months, went from being hailed as Europe’s best shot at a homegrown EV battery champion to a company struggling to stay afloat.
This kind of hype captured the attention of investors, with substantial financial backing propelling Northvolt’s rapid ascent. The Swedish manufacturer has long been a favorite among Western investors, securing over $15 billion in funding from high-profile names like Volkswagen, Goldman Sachs, and BlackRock, according to media reports. Meanwhile, Northvolt won significant orders from Europe’s leading automakers and industrial giants.
However, despite its impressive financing and strong order book, the company’s progress has been far from smooth. Disappointing financial results have exposed a range of challenges, including production bottlenecks, low yield rates, and technical hurdles. As a result, Northvolt’s production capacity has struggled to meet demand, leading to supply delays and dropping numbers of orders, according to an analysis published by the Paper.
Northvolt, which employs around 6,600 staff across seven countries, is struggling with cash flow that reportedly will only last a week.
Unable to secure a last-minute financial rescue deal with its investors, Northvolt has been forced into bankruptcy and initiated a restructuring process under Chapter 11 protection, a provision available to foreign companies operating in the US, which allows the firm to continue operating during the restructuring period.
Whether or not Northvolt’s development aligns with the mindset of some Europeans seeking to reduce dependence on China’s EV supply chain, the reality is that this mindset is not advancing the European battery industry. What the industry truly needs are breakthroughs in core technologies, along with improved yields and production capacity driven by these innovations. Achieving these goals will require not only hard work but also a comprehensive enhancement of manufacturing capabilities and a spirit of mutually-beneficial international cooperation, rather than a zero-sum approach focused solely on reducing reliance.
The European EV industry is currently experiencing growth, driven by market demand. Looking ahead, a key factor for sustaining this growth, attracting more EV manufacturers to establish assembly plants in Europe, and promoting localized production, will be the development of the core component supply chain, particularly the EV battery sector.
There is significant potential for collaboration between Chinese and European companies in the EV sector. Both sides have strong foundations for partnership, particularly in areas like new energy and smart manufacturing. Such cooperation not only enhances the competitiveness of both industries but also plays a critical role in stabilizing and strengthening the global EV supply chain.
The challenges currently faced by Northvolt highlight some of the vulnerabilities within the European EV supply chain. These issues represent a shared challenge for both European and Chinese companies, many of which are increasing their investments in Europe. For both regions, it is essential to deepen communication and foster collaboration, exploring more flexible and diverse cooperation models – not just through investment, but also by promoting free trade. This approach will better equip both sides to mitigate risks and address potential disruptions in the supply chain.
Westerners who advocate for reducing dependence on China’s EV supply chain should understand that merely rejecting made-in-China products and attempting to undermine Chinese industrial supply chains will not lead to breakthroughs in core technologies or enhance their own industrial competitiveness. In reality, shifting from a mindset of “reducing reliance” to one of “cooperation,” and fostering open, constructive international collaboration, could play a pivotal role in driving the growth and advancement of Europe’s EV sector.
The challenges faced by Northvolt also offer valuable insights for Chinese EV supply chain companies, highlighting the need for continued investment in technological innovation, talent development, and manufacturing improvements in the face of intense international competition. To remain competitive in this fiercely globalized market, Chinese companies must commit to sustained efforts and progress. The progress made by Chinese companies is a “positive asset” to the global EV supply chain.
It is hoped that European companies in the EV sector will collaborate with their Chinese counterparts, working together to advance steadily, enhance technological capabilities, and respect each other’s core interests. This will help promote the continued development of the EV industry.
The author is a reporter with the Global Times. [email protected]
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Publish date : 2024-11-24 07:56:00
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