Europe's Battery Struggle: Northvolt Failure and New Partnerships

Europe aims to achieve climate neutrality, but the continent still relies heavily on batteries produced abroad. The vision of a new, innovative, long‑lasting and clean European battery industry clashes with the fact that Asian companies—especially those from South Korea and China—lead electric‑car battery technology. The “Gigafactory map of Europe” once symbolised a new era of independence, yet today many projects are on hold or abandoned, leaving the region dependent on Chinese manufacturers such as CATL, which has built large factories across the continent. Researchers remain hopeful, but the lack of a clear agenda and swift implementation has caused Europe to miss the early development window that China seized.

The Northvolt Saga: A Case Study of Failure

Northvolt was promoted as Europe’s largest battery factory and a beacon of technological sovereignty. It promised mass production by 2021 with a target of 500,000 batteries per year, and its employees initially felt pride in building a new town around the plant. Within months, however, organizational changes and a “sad day” announcement revealed deep problems. The company faced a high reject rate, cells that failed quality standards, and production steps that took too long. The gigafactory’s scale amplified these issues, leading to billions of euros in debt, industrial waste, and ultimately the biggest bankruptcy in modern Swedish history. Around 5,000 workers were left uncertain, and empty flats appeared in the town.

A U.S. startup, Leighton, later acquired Northvolt’s assets at a discount, aiming to fix the shortcomings and re‑enter the European market. While the acquisition offers a chance to revive the plant, the venture remains risky because operating a gigafactory of this size is uncharted even for Leighton.

Battery Production: Technical Challenges and Processes

Battery manufacturing has a high failure rate because it involves many intricate steps. Production starts with a wet slurry—an electrode paste applied to foil and dried. The dried film is cut into sheets, stacked, inserted into a housing, filled with electrolyte, sealed, and then tested through charging and discharging. Each step requires clean rooms to limit particle contamination and dry rooms to remove moisture; even a single conductive particle can cause a short circuit.

Gigafactories rely on numerous machines that are not plug‑and‑play; they must be installed, calibrated, and continuously adjusted. Any inspection or readjustment halts the entire line, creating enormous losses. Scaling up from laboratory or university settings to massive factories introduces further difficulties, leading to high scrap rates and industrial waste—key contributors to failures like Northvolt’s.

Asian Dominance and European Lag

Asian manufacturers dominate the battery market. Chinese giants such as CATL have invested the same amount (€7 billion) in a single Hungarian plant that the European Union has allocated to the entire sector. Their control extends from raw materials to final cell pricing, leaving few viable alternatives for European electric‑car makers. Europe’s slower response and smaller investment pool have allowed Asian firms to secure the technological lead, and if Europe continues to buy equipment from China, it risks receiving sub‑optimal products.

Efforts Towards European Battery Sovereignty

In response, Europe launched initiatives such as Northvolt and the Battery Production Days 2025 conference, seeking to build domestic capacity. Researchers like Jessica Schmidt are exploring semi‑solid and solid‑state batteries, with NCM mass production targeted for 2027. Partnerships are increasingly viewed as the fastest route to progress.

Power Co, a Volkswagen subsidiary, exemplifies a partnership model that imports proven Chinese technology while retaining know‑how and full factory control. By sourcing tested equipment and maintaining close cooperation with suppliers, Power Co aims to minimise startup risk. The VW plant in Zwickau, now operating its first battery‑cell factory in collaboration with Power Co, is in the hot‑commissioning phase and plans a production ramp‑up in late 2025.

Leighton’s acquisition of Northvolt’s assets also illustrates a hybrid approach: a U.S. startup buying European remnants, employing former Northvolt managers, and attempting to avoid past mistakes. While the venture carries risk, it provides a potential lifeline for Europe’s battery ambitions.

Future Outlook and Potential Solutions

Batteries are a long‑term game; the cell can represent up to 40 % of an electric car’s cost. Europe must set a clear political vision, secure massive financial support, and continue forging partnerships that avoid dependence while building expertise. Tenacity, collaboration, and realistic goals—perhaps aiming for “third‑best” rather than the absolute leader—are essential. If Europe cannot produce its own technology, it will remain an “extended workbench” for Asian firms, jeopardising jobs and strategic autonomy. The Power Co blueprint, combined with new ownership of Northvolt’s assets, may represent Europe’s best chance to achieve battery sovereignty.