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Heavy snow blends into white thick clouds in Skellefteå, a riverside city in northern Sweden that is home to 78,000 residents. It’s also the location of what was supposed to become Europe’s biggest 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 multi-billion euro contracts with carmakers including BMV, Volkswagen and Nordic truck manufacturer Scania.
But it ran into major financial troubles last year, reporting debts of $5.8bn (£4.6bn) in November, and filing for bankruptcy in the US, where it had been hoping to expand its operations. Since September it’s laid off around a quarter of its global workforce, including more than 1,000 staff in Skellefteå.
Some researchers and journalists tracking Northvolt’s downfall share the view that it was at least partly caused by a global dip in demand for electric vehicles (EVs). In September, Volvo abandoned its target to only produce EVs by 2030, arguing that “customers and markets are moving at different speeds”.
Many also think that the global battery industry needs more investment support to help struggling companies like Northvolt, whose problems have raised concerns about Europe’s ability to compete in this sector.
Others argue that European governments should put more money behind their climate targets, as was done in countries like the United States and China. Sweden has refused to bail out Northvolt, saying startups should be subject to market forces rather than getting taxpayer help, but the opposition has criticized this stance, pointing out that big oil companies do get government aid.
As things stand, very little battery cell production takes place in Europe compared to other regions. Some want more EU-wide support to increase the industry’s competitiveness.
Anders Carlsson, Head of Industry Sweden, hopes Sweden will maintain a strong industrial commitment to sustainability: “This must be a common effort to boost our industry – both through subsidies and investments,” he said in an interview.
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