After Swedish battery maker Northvolt filed for bankruptcy last week, Sweden's Deputy Prime Minister Ebba Busch urged the EU to amend its clean-tech funding rules to allow the company to access support that could be crucial for its survival, Reuters reported on Monday.
As the bankruptcy of Northvolt marks a major setback for Europe in the electric vehicle (EV) battery industry, it is understandable that European officials are seeking to provide more funding support for the company. However, it's unpredictable whether funding alone can help the company surmount its challenges.
Since its founding in 2016, Northvolt has been receiving funding support; however, this has not shielded the company from bankruptcy. When it announced its bankruptcy, Northvolt acknowledged, "despite liquidity support from our lenders and key counterparties, we were unable to secure the necessary financial conditions to continue operating in our current form."
While it is beneficial for Northvolt to continue to receive financial support to help the company survive the bankruptcy crisis, other important factors that contributed to the company's plight should not be overlooked. Only by identifying the causes of these failures can the company and the EV battery manufacturing industry in Europe break through in the rapidly developing and highly competitive global industrial landscape.
The failure of Northvolt also highlights that, against the backdrop of immature design, processes and equipment among European battery manufacturers, blindly reducing cooperation with Chinese industries that hold advantages will inevitably undermine plans for the rapid expansion of local manufacturing in Europe.
For instance, Northvolt admitted it depends on Chinese suppliers for cathode active material, according to the Guardian. Northvolt has been reliant upon Chinese equipment suppliers since early on, according to media reports.
The bankruptcy of Northvolt is not an isolated incident. Since 2023, several European battery companies, such as Britishvolt and AMTE Power, have also declared bankruptcy. Behind these bankruptcies lie many challenges facing Europe in the field of power batteries.
Northvolt was founded during a period when Europe was trying to reduce its dependence on Chinese EV batteries. The European industry aimed to establish a local battery supply chain by fostering the growth of a leading local player. However, efforts to develop a local industry in Europe have been accompanied by a misguided tendency toward protectionism.
While increasing funding support to European companies, the EU imposed hefty "anti-subsidy tariffs" on Chinese EVs. This double-standard move has drawn firm opposition from China and even many EU companies, disrupting the atmosphere of industrial chain cooperation between China and Europe in the EV and battery industry.
In addition, European policymakers advocate for reducing reliance on Chinese companies. This reluctance to cooperate with Chinese counterparts that possess the necessary expertise, equipment and material that European companies need is nothing but an obstacle hindering the development of European companies like Northvolt.
While the deputy prime minister of Sweden is seeking European funding support to help the Northvolt get through its difficulties, the official still views the Chinese EV battery industry as a threat rather than a win-win cooperative partner.
"If the EU Commission keeps on only supporting newcomers within the battery sector, then the 'clean industrial deal' on European soil will be in the hands of China," Busch said, according to Reuters.
In sharp contrast, Chinese officials have consistently emphasized the commitment to pursuing win-win cooperation with the EU in the EV industry. Additionally, Chinese EV and battery companies have been actively seeking partnerships with their EU counterparts, including establishing manufacturing plants within the bloc.
If the EU can maintain its commitment to expanding investments, it will still be beneficial for the battery industry. However, it is even more important to recognize the negative effects of protectionist tendencies and to adopt a correct and rational perspective on cooperation. This is a viable path to achieving breakthroughs in the intense global competition.
