The European battery market has been shocked by the announcement of the bankruptcy of the continent’s biggest battery manufacturer, but given the circumstances surrounding this collapse, it could be considered an opportunity for material suppliers and manufacturers in the sector.

The collapse of Northvolt is somewhat unusual in that its root causes are not linked to the battery market itself, which has only diversified and increased since the company was first incorporated a decade ago, but instead built on mistakes and issues somewhat unique to itself.

Understanding what comes next for the market, both in Europe and around the world, requires an understanding of how we got to this point in the first place.

Why Did Northvolt Collapse?

The shortest possible explanation for the Northvolt collapse is that it was the result of mismanagement at all levels in the pursuit of rapid and unsustainable growth. Why the company was mismanaged is still being debated as of March 2025.

Northvolt launched multiple battery factories before it had properly refined its processes, leading to poor quality control, delays and major contract cancellations, with the cancellation of a €2bn contract with BMW as reported by Reuters creating a domino effect which ultimately forced the company into bankruptcy.

Whilst there have been some interest and calls for the Swedish government to bail out or nationalise the firm to ensure it could be sold to potential investors before it implodes entirely, the most likely outcome is outright liquidation.

The question at this point is what happens next, and what lessons can be learned for innovative startups that will follow in its wake.

Rome Was Not Electrified In A Day

Any autopsy of Northvolt will be incomplete until the final fate of the company is complete, but the biggest issue that any takeover or successor company will have is scaling up properly.

Northvolt, thanks in part to €16bn in initial investment from car manufacturer Volkswagen and investment fund Goldman Sachs, had already drawn up plans to build a second factory in Sweden, as well as plants in Germany and Canada before the original factory was in full operation.

This ultimately led to problems with scaling up operations, significant cost increases and quality control problems that quickly spiralled and escalated in 2024 up to a Chapter 11 Bankruptcy Protection filing in the United States.

The biggest lesson any European successor needs to learn is that scaling up operations needs to be steady, sustainable, operated in conjunction with knowledgeable partners and focused on perfecting the process before even considering expansion.

A Foundation Is Laid

A lot of Northvolt’s operations have been criticised and will come under greater scrutiny given the ultimate fate of the company, but it is important to note the immense foundation that the company has left that will make the next Northvolt more likely to succeed.

A lot of the problems that ultimately ended the company were the result of a skill and technology gap. Much of the battery technology Northvolt used was imported from South Korea and China, requiring continuous support and leading to communication breakdowns.

However, unlike Britishvolt’s failure to launch entirely, Northvolt was in operation and created several major innovations which could be utilised at scale by other battery makers.

This includes the innovative sodium-ion batteries that they revealed in late 2023, showcasing the future of sustainability in the process.

Whilst sustainable scaling is key to the future of the European battery trade, there are also a lot of opportunities to be found in the wreckage of a company that failed more due to avarice and mismanagement than the sector it was in.

A Future In Plurality

Arguably the biggest issue with Northvolt was the idea that there needed to be a monolithic battery manufacturer rather than a plurality of medium to large-sized battery makers throughout the continent.

Much of the analysis of Northvolt has focused on gross supply and capacity, which is not necessarily the most accurate way of looking at the European battery market.

Most companies looking for large-capacity batteries of the type seen in electric vehicles often need specific designs, form factors or features compared to their competitors, which means that demand is often underreported.

Instead of one single company to pin the entire hopes of a continent on, the future of EV battery supply might consist of multiple manufacturing hubs across the continent owned by different companies with particular specialities.

They would then work with suppliers and toll processors to ensure that their supply meets the demand of whichever market they find themselves in.