Outside In | Europe’s battery crisis a humiliating reminder of China’s EV dominance
The collapse of a Swedish EV battery maker underscores just how much the green transition still depends on supply chains dominated by China
Richard Milne at the Financial Times called Northvolt’s resort to Chapter 11 bankruptcy protection, with US$5.8 billion of debts and just US$30 million cash in its coffers, a “Nordic noir thriller”. The collapse is nothing less than a dagger thrust into the heart of Europe’s future as a global automotive industry leader. Volkswagen has written down most of its 21 per cent stake in the venture. Goldman Sachs is writing off US$896 million in the venture. European taxpayers will have to provide $313 million because of EU guarantees.
The most direct impact of the Northvolt collapse will be on Europe’s critically important automotive sector, which has been a symbol of the continent’s economic virility for half a century. The sector accounts for 13.8 million jobs – over 6 per cent of Europe’s total employment. In Germany, Sweden and four other EU economies it accounts for over 10 per cent of manufacturing jobs.
Companies like Volkswagen, BMW, Mercedes and Porsche may have been global giants as car manufacturers for most of our lifetimes but their tardiness in addressing the shift to EVs has jeopardised not only their futures but those of the smaller manufacturing businesses that rely on them. Northvolt’s bankruptcy leaves them frantically searching for new EV battery suppliers, most of which are in Asia.
