Europe’s battery makers seek a different growth path after Northvolt’s collapse
Companies scaling down ambitions even as Europe is locked in race to reduce dependence on China
European battery companies are scaling back their ambitions and striking deals with Asian competitors after Northvolt’s collapse cast doubt on the region’s attempts to build an independent industry.
The Swedish group was one of Europe’s best funded start-ups over the past decade and raised $15bn from governments and investors before going bankrupt in March.
Northvolt is now a cautionary tale for other start-ups who are key to achieving the EU’s strategic goal of breaking its reliance on China for batteries as customers shift to electric vehicles, but remain years behind Chinese and Korean competitors.
Groups such as the French Automotive Cells Company and Verkor, and Germany’s PowerCo, are trying to scale up the production of high-power batteries and challenge Asian counterparts such as CATL and BYD.
But they face an even more challenging economic environment, while also needing to reassuring potential financial backers that they will not overextend themselves.
“Investors are asking companies to prove they are not the next Northvolt,” an industry adviser told the Financial Times at Batteries Event, a recent industry conference in Dunkirk.
Europe wants to make 90 per cent of batteries within the continent by 2030. But production capacity will still lag behind China. McKinsey Battery Insights analysts expect Europe’s announced battery production capacity to reach 720 gigawatt hours in 2030, up from 150GWh last year, compared with the 4,370GWh estimate for mainland China.
While some Asian companies have operations in Europe, executives and politicians say European companies must also contribute to the effort.
“We need this industry in Europe, not to provide 100 per cent, but to provide a significant portion,” said Yann Vincent, chief executive of ACC. “It’s a critical element of European sovereignty.”
Meanwhile, European carmakers, including Stellantis and Renault, are already equipping vehicles with batteries made by Asian companies and Chinese companies are extending their dominance of the technology.
CATL and BYD recently unveiled batteries that can be fully charged within five minutes, tackling a barrier to growth of EVs and putting pressure on European challengers to show they can efficiently scale up production.
ACC, a joint venture between Stellantis, Mercedes-Benz and TotalEnergies, is building towards 16GW capacity for the first industrial bloc at its site in Douvrin, northern France, by 2026. It faces similar challenges to those that confronted Northvolt — how to keep production yield high and limit the costly generation of scrap products in the production of battery cells.
“We’re in a period until mid 2026 where we’ll receive all the blows but not yet reach full turnover,” Vincent said, adding that the company needed to cross this “valley of death”.
To preserve capital amid a slowing EV market, ACC abandoned plans to open new factories in Germany and Italy. It is also in discussion with an unnamed “Chinese partner” to learn from its production processes and accelerate efforts to catch up, Vincent said.
Northvolt stretched itself thin by trying to create a value chain of battery-related services, including recycling and cathode manufacturing — a mistake the remaining groups want to avoid.
“Northvolt had the great luxury of being able to raise lots of money quickly. That may also have caused their fall,” said a banker working in the sector.
PowerCo, the Volkswagen-owned producer of battery cells for EVs, has also scaled back original plans. It expects to start producing batteries at its converted plant in Salzgitter this year, but will build one, rather than two production lines as originally envisioned.
Renault-backed Verkor, which has raised more than €2bn to build a gigafactory in Dunkirk, would adopt a “humble” approach by taking on fewer projects and focusing on a single client, said chief executive Benoit Lemaignan.
“We need to be modest in setting up the first part of the project, even if it sounds good on paper to have multiple different workstreams,” he said. Verkor will provide batteries for some of Renault’s sports cars and vans.
Kevin Brundish, head of LionVolt, is among executives who have cautioned against the capital-intensive route taken by Northvolt, and instead favour smaller-scale projects. The Dutch start-up uses technology pioneered in the semiconductor industry to make cells that produce up to twice the range of current battery models and charge twice as quickly.
Companies should not be “trying to compete with entities that have a 10- year head start”, said Brundish. LionVolt has raised €30mn for the commercial manufacturing of its patented anodes in Eindhoven and for a factory in Scotland.
Nard Sintenie, co-founder of Innovation Industries, a Dutch venture capital firm that has invested in LionVolt, said while Northvolt was “me, too” technology, his fund preferred technology that was “disruptive”.
But experts warned that Europe’s goal to become self-sufficient in battery manufacturing would not be achieved without greater public funding similar to that enjoyed by Chinese companies.
ACC, Verkor and Taiwanese solid-state battery developer ProLogium have received more than €3bn in French public funds in recent years to set up operations in the “battery valley” of Dunkirk, which also benefits from access to nuclear energy.
But Dunkirk mayor Patrice Vergriete warned that it would be hard to maintain such support do to France’s high budget deficit.
“France has accompanied these industries but we have less means today and we’re turning towards the European Commission, saying . . . isn’t this re-industrialisation project a European project?”
A commission spokesperson said “the competitiveness of our industry is the number-one priority”, and pointed out that its clean industrial deal had “unlocked” €100bn to promote clean manufacturing.
ACC’s Vincent and Verkor’s Lemaignan called for funding to coalesce around businesses that could realistically produce batteries at scale, while one banker said they expected “consolidation” in the sector.
“Even with strong shareholders, they are under a very strong pressure,” Vincent said. “We’re turning towards the European Commission saying that we need help to cross this valley of death.”