Special Edition: Northvolt

Dear all,

Like many others, I have been following this story for months now. Being Swedish and a sustainable investor for the last 25 years, it naturally caught my attention a long time ago. I visited Northvolt's factory facilities in the winter of 2022, and some impressions from that visit are what I share with you in this special edition of ESG on Sunday.

It is an expensive and, in a way, tragic lesson in geopolitics, the ongoing “green war” with China, and the hopes dashed by mismanagement. The daring acts of the founders, the courage of the investors, and the high hopes for success were mixed with geopolitical tensions and a not-so-hidden wish to eliminate Chinese dominance and control in this space.

There are many stories about Northvolt, and there will likely be books and even films made about this historical failure. Clearly, there are individuals who have been, and still are, privy to inside information about Northvolt but have not stepped forward to share an insider's perspective on the burning of billions of dollars for nothing. Or was it an honest, courageous attempt by a small country like Sweden—with its many historical victories in technical development and adaptation—to take on giants like China and the US?

Maybe the EU is, after all, just an old, tired, grumpy pensioner unwilling to accept that the next stop may well be a morgue. Or maybe the EU truly did all it could. There are, of course, reasons for this failure, directly related to poor—or, shall we say, utterly poor—management, megalomaniacal expectations, and a huge dose of sheer bad luck.

Northvolt: A Cautionary Tale of Ambition, Innovation, and Overreach

In 2017, Northvolt emerged with a bold vision to anchor Europe’s energy independence by producing EV batteries at scale, directly challenging Asian dominance in the field. As the green transition gained momentum, the stakes for Europe's automotive industry were high. Without a localized battery supply chain, Europe risked becoming an economic and strategic outpost for Asian manufacturers. Northvolt set out to change this narrative, attracting billions in investment from financial heavyweights like Goldman Sachs and Citi, alongside automakers like Volkswagen and BMW, who committed to purchasing its batteries. The project was heralded as Europe’s best shot at building a thriving battery industry to underpin its clean tech aspirations.