Sweden’s Northvolt just went bankrupt and European car partners are left hanging.
Swedish battery maker Northvolt has officially filed for bankruptcy in Sweden, marking a dramatic fall for what was once considered Europe’s greatest hope for competing with China in the electric vehicle battery industry. The company, backed by heavyweight investors including Volkswagen, Goldman Sachs, and BlackRock, announced on Wednesday that it failed to secure necessary financing to continue operations. This bankruptcy represents a significant setback for European technological ambitions in a sector where China and South Korea currently dominate.
Despite attracting an impressive $15 billion in corporate and government investment, Northvolt’s aggressive expansion strategy ultimately proved unsustainable. The company, founded by former Tesla managers in 2016, had attempted to simultaneously develop up to six factories—a strategy that former employees cited as problematic alongside issues with management, safety standards, and overreliance on Chinese machinery.
The bankruptcy follows a series of high-profile partnership challenges. BMW, which had initially signed a major deal with Northvolt, later canceled a €2 billion order citing concerns about production scalability. Meanwhile, Volkswagen had positioned Northvolt as a strategic lead supplier for premium battery cells in Europe and increased its ownership stake in the company, only to recently write off its Northvolt equity and loans for a €661 million loss.
Volvo Cars had established a joint venture with Northvolt to develop and produce battery cells, with plans to take ownership of their jointly owned gigafactory in Sweden. The new lithium-ion battery factory near Gothenburg was intended to supply both Volvo and its Polestar brand before financial troubles derailed these plans.
Truckmaker Scania, which had partnered with Northvolt to develop green batteries for trucks and secured additional cell supplies, provided fresh capital in November and purchased Northvolt’s industrial battery systems business. However, Scania has acknowledged that its electric truck plans have been affected by the battery supply shortage and has secured an alternative supplier.
The Swedish government’s decision not to offer major subsidies—unlike Canada and Germany—contributed to Northvolt’s financial challenges. While the company had filed for Chapter 11 bankruptcy in the US last November, it spent recent months in unsuccessful talks with potential investors to secure $1 billion for its factory in Skellefteå.
The bankruptcy trustee will now oversee the sale of Northvolt’s assets, including its Skellefteå factory, R&D facility in central Sweden, and land and permits for factories in Germany and Sweden.
