Northvolt is cutting back when it should be growing - what’s gone wrong?
A lot of people will doubtless blame China, but I would highlight two issues which have been working against the European battery industry for years. They didn't kill the ill-considered strategies of Johnson Matthey or BritishVolt, nor the pure fantasies of Italvolt. But they are stalking the massively funded hyper-ambitions of integrated, European BVC* domination at NV
1. The Inflation Reduction Act sucked capital, talent, AND customers (in the form of OEM electrification plans) westward across the Atlantic
And...
2. Building gigafactories, whether cell or component, remains an integrated supply chain play. Success requires decades-long, strategic commitment from raw materials suppliers through the battery chain to OEMs, and of course financiers
It strikes me that only equity partnerships can secure that in our Euro-western democracies. Governments won't orchestrate industries to the same effect as in the asian competitors. And they won’t invest the billions of subsidy that the US, under Joe Biden at least, has been willing to fund
German and French automakers still haven't committed with the required vigour. The Germans in particular remain culturally committed to the internal combustion engine. As governments vacillate around consumer EV subsidies and economies stutter post-Covid and post-Ukraine, the business case for billions needed to wholly commit to switching manufacture seems risky indeed. And lack of a built and proven supply chain doesn’t help
Miners too haven't stepped in - more used to business models of scaling production to meet demand and selling commodities into competitive markets. All-told, value chain remains full of wary investors waiting, hoping not to be the first mover, rightly fearful of being stranded with unwanted giga-assets
Plotting a way out will be a true test of strategy!
* Battery Value Chain
