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There are few more perfect examples of how ill-advised and unrealistic the push for the so-called green transition is, than the failure of Swedish battery manufacturer Northvolt, a scandal that has been growing by the day since last year’s autumn.
Right now, the company that was going to be Europe’s saviour from dependence on Chinese batteries and the final nail in the coffin for the combustion engine is digging its own grave by spiteful lawfare against its creditors. Its once many supporters in the political and media class are mostly silent.
The green startup to save us all
To recap for those uninitiated, Northvolt was founded with the ambition to become Europe’s leading battery manufacturer, betting on the success of the electrical vehicle market. A number of key figures, among them “green” venture capital investor Harald Mix, set the company up as the harbinger of a “new industrial revolution” in Swedish Norrland, the far-northern regions of the country that is in many respects economically struggling. Naturally the promises were alluring, and much of the political establishment was quickly on board. The general optimism and excitement about green technology and the transition away from fossil fuels, the so-called electrification, carried much water for Northvolt from its founding in 2017 all the way into 2024. An added bonus was that the brand-new battery producer would make Europe and the West independent of Chinese-made batteries, which were taking over more and more of the market.
The political and media goodwill translated into significant sums of public money. According to Dagens Industri in the spring of 2024, 88 billion SEK (€8 billion) had been granted to Northvolt up to that point, in various forms of government support and generous loans. The European Investment Bank contributed at least one billion euros in January of 2024, along with many other public actors. The governments of Germany and Canada have subsidised Northvolt’s establishment with battery factories in their countries, to the tune of one and four billion euros respectively. In Germany Northvolt has ties to auto industry interests, with Volkswagen as the largest single shareholder of the company (at 22 percent).
With just about every powerful voice in the public debate in its favour, where did it all go so wrong for Northvolt?
Unsafe working conditions at the factory
The company started receiving negative coverage in Swedish media in 2023, with a number of deadly accidents at its factory in the city of Skellefteå in northern Sweden. This is when questions were raised about Northvolt’s compliance with Swedish labour regulations, and a spotlight was shined on the prevalence of foreign labour migrants at its facility. Foreign construction contractors who were hiring illegal migrants and skirting safety rules shattered the image of the morally pure green startup as a wholesome and responsible societal pillar. One of the selling points to the Swedish public was the creation of new jobs that the battery manufacturing was going to bring. What was discovered eventually was an overreliance on cheaper labour from Eastern Europe and Asia.
The overreliance on Chinese battery manufacturing technology, requiring Chinese labour to operate, also called the company’s ambition to create an independent European battery industry into question, as well as being a safety hazard.
Trade unions involved with feet on the ground at Northvolt sounded the alarm on the conditions at the site in Skellefteå. The electricians’ union likened work at the factory to “slavery”. A local spokesperson for the construction workers’ union criticised the green project as a gateway into Sweden for illegal labour migrants.
Financial crisis mounts up
In 2024 the company’s financial problems were starting to become a serious concern for its investors. Many of the creditors were found unable to get their investments back, because production had hardly even gotten started. According to Dagens Industri, in April of 2024 Northvolt met a meagre 0,5 percent of its by then promised production capacity. The only option that has remained for Northvolt and its investors since then has been the loose hope that the factory will be able to get up on its feet with enough long-term support.
Confidence continued to waver however, and in September 2024 BMW cancelled an order of batteries in the magnitude of 2 billion euros, and according to BMW this was because of the massive delays in the factory’s progress. BMW remains to this day however, much like Volkswagen, a major shareholder in Northvolt.
As a result of the long series of setbacks, Northvolt had a hard time raising new funds for its continued operation. As the ambitious battery manufacturer approached a critical date, its co-founder Peter Carlsson, with a background at Tesla, left his position as CEO of the company in November – whether he resigned on his own volition or was removed remains to be speculated about. The same month Northvolt applied for a Chapter 11 restructuring in the United States, taking advantage of its minimal operations in the country which allowed it to file in a Texas court. As the company struggled to save its main body, some of its subsidiaries, including one formed to manage the expansion of the Skellefteå factory, filed for bankruptcy in Sweden. Northvolt as a whole was 64 billion SEK, or 6 billion euros, in the red.
The victims of Northvolt
While first resembling a tragedy, Northvolt’s struggle for survival from this point on has revealed the predatorial side of ‘green capitalism’. Much criticism was levelled at the key figures at the helm of Northvolt, who it turns out sold off their shares in the company just before its financial crisis became widely known. According to investigations by Swedish newspaper Aftonbladet, the former CEO Peter Carlsson exited Northvolt leadership about 200 million SEK, or 20 million euros, richer. Speculations about the green carousel being a plot to enrich a select few at the expense of the wider public are understandable.
The revelation was viewed as especially egregious as shareholders who had bought stock through a special programme for early employees were prohibited from selling their shares as soon as the financial crisis became public – even though they were allowed to according to the terms of the programme. Many of Northvolt’s own employees found their fortunes locked into the company, which was slowly circling the drain.
Among the public institutions that invested in Northvolt are pension funds, which of course are intended to allocate their investments in order to generate long-term financial yield for their clients. As much as 9 billion SEK (900 million euros) of pension investments from a combination of state-owned and trade union-owned pension funds are estimated to have been wiped out as the Northvolt stock crashed. The then-Social Democratic government, supported by the Green Party, is implicated as having changed the rules for how the state-owned pension funds are allowed to invest, in order to facilitate more green public investments into companies like Northvolt. Unconstitutional, argued the current governing party the Moderates in January 2025.
The perhaps biggest social and economic damage suffered through Northvolt’s failure has been the company’s Swedish subcontractors, who now cannot be paid for their services. Manufacturers of special technology, construction firms, and providers of both vital and trivial services to Northvolt have revealed how they have been threatened with litigation by the company’s American lawyers, if they do not withdraw their invoices. Northvolt has claimed, in contradiction with Swedish law, that the Chapter 11 restructuring in the United States protects them from claims by other parties. Northvolt’s hostile attitude and refusal to deliver payments to actual providers to the Swedish economy has been likened to fraud-like behaviour by commentators.
What is the future of Northvolt?
The above text does not do the entirety of this Swedish green catastrophe justice. But while the scandals keep piling up and the electric dream is completing its transformation into a nightmare, there is an awkward silence from the political side of things. Several ministers and other politicians on national and local level have previously sung their praises to Northvolt, but now there is a strong reluctance to take responsibility for the public resources wasted, billions of taxpayer money lost, and the lives and businesses that have been turned on their heads.
Ultimately, it is political decisions that led to this point, and not the errors of naive investors. The unsustainable Northvolt would never have become disastrously inflated if it was not for the politicising of the market that encouraged green bubbles to grow.