Last week, this correspondent brought you an article from Australia about how China has captured 80% of the world’s solar market, all powered along by its coal-fired economy.
Now, it seems, Europe is on the brink of losing the EV battery market to China, too. According to the Telegraph, Europe’s electric car market rebellion is claiming its biggest scalp. There’s no reason to gloat though. The vast sums of money poured into the Swedish-based firm Northvolt, which has now filed for bankruptcy protection, have come from “investors, bondholders, pension funds and European governments since it was founded in 2016”, to say nothing of ceding yet more market dominance and strategic autonomy to China.
The Daily Sceptic flagged up Northvolt’s precarious situation back in September.
Northvolt is now down to its last $30 million and the CEO Peter Carlsson has stood down:
Northvolt has blamed its downfall on foundering demand for electric vehicles (EVs) across Europe. Its “capital structure and business plan were premised on the assumption that the electric vehicle industry would continue its pattern of consistent growth”, said Scott Millar, a restructuring adviser at Teneo, in the company’s court pleading.
As investor fervour for EVs reached its peak during the pandemic, Northvolt expanded aggressively across Europe, the United States and Canada, with plans for a network of gigafactories, as the facilities that manufacture car batteries are known.
However, the bottom fell out of the global market for battery-powered cars in 2023 as inflation and hesitant consumer demand led to a slowdown – and, in some cases, a slump – in EV sales.
Analysts at Rho Motion pared back their predictions for EV sales by a quarter, to 8.3 million by 2030. In Europe, home to Northvolt’s biggest clients, demand has been particularly weak. Sales are down 3% so far this year, according to Rho Motion. In Germany, they have fallen by 18%.
As this graph shows, the only real beneficiary of the EV market has been China:
Volkswagen, a major Northvolt customer and shareholder, last month announced plans to shut three factories in Germany, the first closures in its home market in its history.
At the same time, Chinese carmakers have been undercutting their European rivals by flooding the market with cheaper EVs that run on Chinese batteries. This piled pressure on Northvolt, which had aimed to set itself apart from rivals by developing clean batteries with renewable hydropower.
Even though it was producing 60,000 batteries per week and had $50 billion in future orders, some of Northvolt’s customers, such as BMW, reduced investments in the company as demand slowed. Government investors, meanwhile, withdrew billions in planned funding after Northvolt scaled back its plans for new factories.
The bankruptcy filing buys Northvolt time to salvage its business. Scania, a core customer owned by Volkswagen, has provided $100 million in debt-in-possession financing, a kind of emergency loan, while it has also unlocked $145 million in cash collateral.
“Northvolt’s liquidity picture has become dire,” Millar said in a court filing. It has debts of nearly $6 billion and has already wound down or pulled the plug on several divisions. Investors such as Baillie Gifford, BMW and Goldman Sachs all face having their stakes wiped out by its bankruptcy.
At least the CEO has had the dignity to stand down, admitting “we were overambitious”. But the problems run deeper:
While Northvolt has blamed its demise on the disintegration of EV demand, industry experts argue that mismanagement, inflated expectations and a lack of government investment in electrification are also to blame.
Reports have also suggested an over-reliance on Chinese machinery and engineers meant Northvolt lacked in-house expertise.
Andy Palmer, the former Aston Martin Chief Executive, says: “The biggest issue is that batteries are not easy to make and Northvolt haven’t satisfied the supply demands of their customers – that is a management issue.” James Frith, Europe head at investment firm Volta Energy Technologies, says: “Europe needs to rethink how it supports a nascent sector before China eats up the entire value chain.”
If Northvolt cannot be revived, Europe will cede what little gains it had made against China in building up its own battery supply chain. While EV demand has stalled, mandates to sell more green cars mean demand for batteries will grow. If they are not made in factories in Europe, the bloc will be perilously exposed to China.
“Europe needs battery capacity,” says Simon Moores, Chief Executive of Benchmark Mineral Intelligence. “The pendulum of industrial battery power has just swung east towards China.”
Yahoo! News has more.
There’s more on the story from Reuters, which includes this devastating observation:
“The biggest issue is that batteries are not easy to make and Northvolt haven’t satisfied the supply demands of their customers – that is a management issue,” said Andy Palmer, founder of consultancy Palmer Automotive said.
“The Chinese are technologically 10 years ahead of the West in batteries. That’s a fact,” he said.
At least eight companies have postponed or abandoned EV battery projects in Europe this year, including China’s Svolt and joint venture ACC, led by Stellantis and Mercedes-Benz.
In modern-day technological terms, 10 years might as well be 100 years.
Regardless of your views on EVs, the outlook is grim, and the strategic implications for Europe and Britain potentially catastrophic as they prematurely run down and outlaw older technologies, sacrificing it all on the altar of the Green Dream.
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There is a petition on the Parliament website calling for a new general election that has already surged past the 100,000 limit to trigger a debate in the house. This morning it is well over 340,000. If only we could get the 80% of non-Labour voters along with the anti-Tory voters to sign up.
Almost 600,000 at 11:48.
that so many have signed so fast shows how much the voters detest this Labour branch of Uniparty.
In the hypothetical circumstance that a GE were to be called I’m not sure Reform are ready to win. The Tories would just be an extension of the 14 years.
By 13:30 it will be at 700k.
Today, 25/11 at 0745, it’s at one million, eight hundred and fifty thousand ….. and rising.
Meanwhile, my Audi A4 diesel does 550 miles to a tankful, with zero range anxiety. It’ll last at least another 10 years too.
Provides valuable CO2 for plants too.
Fossil fuels are the real green energy, greening the Planet.
Do you mean 55mpg and 550 miles per tankful?
If it does 550 mpg I want one.
Mine too! I intend to run that car into the ground.
Well done sir, my Chelsea tractor is also helping the tomatoes grow.
So China captured 80% of the global market.
80% of not very much is not very much.
Northvolt went belly-up bacause there is no market to sustain multiple players.
People keep complaining that China is getting all the business, then we read how nobody is buying BEVs – car makers are losing billions, closing plants, cancelling production – and solar is providing only about 1% of World electricity supplies.
Unsustainable ruinables, BEVs are not growing markets for viable businesses. If they were viable – which don’t need taxpayer funded subsidies – businesses would be starting up and thriving everywhere.
China is still a command economy. That means it can throw resources and money at projects that do not provide a return on investment and consume rather than generate wealth. Eventually it will hit the buffers as did the USSR.
If China wants to take over the World’s loss-making businesses, let it. This saves misallocation of capital and other resources in our economy which can be better used on other projects. If China wants to make stuff and sell it at a loss, let it! The people footing the bill are the Chinese people, not us.
Reminder from Adam Smith: Consumption is the sole end and purpose of all production. The interests of producers are to be considered only as much as they serve the interests of consumers.
Translation: an economy is not run to create jobs of profits, it is run to provide things for us to consume which makes us wealthier. And it doesn’t matter who or where they are made.
The market is a place of revelation and information. It points out winners and losers, rising stars and dying dogs. People should stop worrying about Chynah (©️D Trump) and take note of the market.
China has to import well over half of its Oil/Gas, so burning Coal to generate Electricity for EVs appears to be a reasonable national solution for China.
For the West, however, with its infrastructure for Oil/Gas already in place, and plenty of the fuels underground, this excellent Chinese solution isn’t appropriate: it’s diabolically stupid, and only attractive to those that want to destroy their country.
To me, this sound like good news, as it’s a sign of the attempt to force inferior technology on the market by executive fiat on the pretext that this would somehow “benefit the planet” which couldn’t possibly survive an end of the current ice age floundering on the cliffs of reality.
In it’s present form, the UN is an existential threat to the future of mankind which needs to be overcome. Had things been going to its plan, we’d all still be running around masked and prohibited from talking to strangers and would all get quarterly injections of exciting new gene technology or face the very dire consequences of refusing to take these, solitary confinement in concentration camps in remote areas as a start.
This absolutely royal f**kup of our benighted political leaders hasn’t led to anybody taking responsibility for it. It’s the same people who’re nowadays pushing climate change policies, more aggressive internet censorship and more public health diktats based on dubious (politely put) “evidence” put together according to pre-existing political guidelines.
Here’s an idea. When you’re in a hole, stop digging.
Europe has vast reserves of hydrocarbons and experience improving efficiency and genuine environmental performance as opposed to the totally u
Imaginary fake version represented by battery cars.
The solution is there. Fuck net zero and fuck the Chinese.
The irony – Scania being a large lender to this company, only able to do so because of strong sales of their (excellent) diesel trucks.
There’s no irony here. Volkswagen is essentially owned by the German state and systematically plundered to support so-called climate policies. This is just a case of Who has money? and Can we do something to get it?
Fair point, I was referring more to the irony contained in how the money was made.
Sales of things people want, used to prop up the manufacture of things they don’t want.
Could anyone here throw more light on that claim that China is 10 years ahead in battery production – what does that actually mean? If it’s true then Northvolt is doomed. So is Jaguar I suppose…
Why will we buy chinas EV,s when we don’t want Europes ?
The car market in the UK is dominated by the corporate leasing sector, a huge number, if not the majority of new cars sold in the UK are bought by leasing companies. The private motorist comes in 3 years down the line when the ex lease cars come onto the secondhand market. Consequently, for many private motorists, it is Hobson’s choice, you can only take what is on offer as an ex-lease car. The corporate leasing sector is the big purchaser of EVs but even here they are getting their fingers burned because the depreciation on EVs is so huge that some lease deals are now making a loss. But even so, the Corporate World will be obliged to buy EVs. As they have made such big losses on conventional EVs they may go down the route of cheap Chinese EVs on a lease deal that means they can be ‘written off’ after 3-4 years.
EVs seem to becoming a disposable consumer item like a toaster except that re-cyclng EVs is difficult and expensive. The EV green dream will look a little tarnished as the piles of scrapped EVs awaiting re-cycling build up. If the average life span of an EV works out at less than that of an ICE car then the environmental impact of an EV may prove to be significantly higher than that of an ICE car!
Very eco friendly isn’t it – talk about creating a ludicrous arse backwards model..
Just another exercise in political stupidity with equally stupid companies following behind with massive subsdies – but not enough.
The Eco Nutters and their puppeticians in Europe are learning the hard way that they can stop people buying a new petrol or diesel car, but they can’t make them buy and EV.
Excellent news. EVs are another appalling environmental disaster, along with Wind turbines and heat pumps. In 5 years time people will look back and wonder what the hell they were thinking, messing about with this Net Zero nonsense.