The European hope to compete with China in one of the strategic products of the moment fades away. In a serious setback for the European industry, the Swedish group Northvolt officially declared bankruptcy this Wednesday.
Despite being barely a decade old, it was meant to be the European champion in electric car battery production. It managed to attract over 10 billion from both private partners and public subsidies from various countries, leaving in doubt the possibility for the European Union to develop its own industry in a product so essential for citizens' mobility.
"After an exhaustive effort to explore all available means to ensure a viable financial and operational future for the company, the Board of Directors of Northvolt AB announces its bankruptcy in Sweden." This is how the company began its official statement with a debt of 8 billion.
"This is an incredibly difficult day. We set out to build something innovative to drive real change in the battery sector, electric vehicles, and the European industry in general, and to accelerate the transition to a green and sustainable future. The outcome is particularly tough," declared Tom Johnstone, interim chairman of the Northvolt Board of Directors.
It is an example of what was warned in the report by Mario Draghi about the decline of the European industry and how environmental policy has not been consistent with industrial policy. Objectives have been set from Brussels for which there has been no viable European manufacturing.
Subsidies have not been enough. The bankruptcy comes a year after the then Vice President of the European Commission, Margrethe Vestager, announced that she was launching the European mechanism to prevent relocations to the United States with Northvolt. She authorized the German government to subsidize the company with 902 million, despite being a huge amount of state aid, "because it will allow Northvolt to build a gigafactory for electric car batteries in Europe instead of in the United States." The European Investment Bank also lent them a billion. The reality is that Northvolt's only real European plant ended up being the original one in Sweden, with credibility lost due to delivery and quality failures in the supply chain. Northvolt itself needed Chinese components for its production.
A report from the Bruegel Institute indicates that the EU must learn the lesson and not try to boost alleged champions without the necessary foundations, as they can no longer achieve the development of their Chinese rivals.
If not rescued, an administrator will now liquidate its assets and Johnstone hopes that, at the very least, "the foundations we have built will help drive change in the sector."