CGTN Europe interviewed Daniel Harrison, Automotive analyst, Ultima Media
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00:00Hello, welcome back to Global Business Europe. The CEO of the Swedish battery startup Northvolt has resigned after the company filed for bankruptcy protection in the United States.
00:12Northvolt was seen as the leader in European efforts to create an electric vehicle industry to challenge Asia's dominance.
00:19Daniel Harrison is an automotive analyst at Ultima Media. Daniel, good to see you. Welcome to the program.
00:26So just how significant is this resignation and how significant is this bankruptcy filing?
00:31Yeah, I mean it is significant. I don't think it's quite as serious yet as people have made out because it's not quite a bankruptcy per se as we would understand it.
00:42It's what's called a Chapter 11 bankruptcy protection that they took in the U.S. What that means is it allows them to continue operating, to restructure, to access new forms of finance which has done from Scania, one of its investors.
01:01And it's, shall we say, a step backwards in terms of their ambitions as a company. But it isn't quite the end, but it's certainly an alarming development, especially combined with the CEO resigning a day after this announcement.
01:19Northvolt was seen as the leader in European attempts to challenge Asia's dominance. I mean, where does this leave Europe's EV supply chain and strategic independence?
01:33Yeah, I mean it is a major blow for that especially because Northvolt and ACC were the two main sort of gigafactory consortiums that were developing in Europe, as you say, to challenge that Chinese and Asian dominance.
01:47So that's a major blow. Part of it has been, of course, as we well know and it's widely reported, the general slowdown in EV sales, particularly in Europe and Germany. And that's part of the reason Northvolt's in problems because they lost a €2 billion contract with BMW to supply batteries to BMW in June of this year.
02:12And that's part of its woes right now. There have been other challenges, of course, in terms of rolling out its production, developing competitive battery chemistries. But that decline in demand has been the major challenge because those massive investments that it's made are essentially contingent upon exponential increases in EV volumes which haven't materialized yet.
02:39We are where we are. So what are the broad lessons, if there are any, for the global EV industry from the Northvolt story?
02:49There's a lot of lessons. Part of the reason that Northvolt has struggled is because the Chinese first movers, you know, the CATLs, the BYDs of this world have a technological advantage.
03:05Now, if you're a car manufacturer, you want the best battery technology, you want the cheapest battery technology to make your product as attractive as possible. And new entrants to that relatively new market, such as Northvolt, will always struggle to get those supply agreements with the car manufacturers.
03:25And as I said, Northvolt has lost one with BMW. It's currently planning to supply VW once it ramps up production. But we've seen with Volkswagen, of course, they're in significant financial woes as well.
03:39So the answer there is it has to establish competitive battery technologies and to get the finance in place, the partnerships, the supply agreements with OEMs in place first before it can even start to compete on the global stage.
03:54Daniel, thank you for that. And thanks for coming on the program. Daniel Harrison, the automotive analyst at Altima Media.