Northvolt challenges China’s battery monopoly with sustainable solutions for EVs

The Swedish company Northvolt is on a mission to disrupt China’s stronghold in the battery sector and provide sustainable energy solutions for electric vehicles globally.

With the support of prominent investors like Goldman Sachs and major European car manufacturers such as Volvo and Volkswagen, Northvolt is currently building a massive gigafactory in Skelleftea, Sweden.

The facility will rely on renewable energy generated by local hydropower plants. The primary objective of Northvolt is to establish battery production self-sufficiency in Europe while minimizing reliance on Asian suppliers.

“Europe was not really having any supply chains,” said CEO Peter Carlsson. According to him, this realisation served as the primary motivation behind the establishment of Northvolt.

He also noted that the northern region of Sweden is abundant in large rivers, many of which have been utilized for hydropower generation. “Hydropower is the biggest energy source in Sweden,” Carlsson said.

The construction progress of the Northvolt plant, which commenced in 2019, has experienced delays. Currently, only approximately one-third of the extensive facility has been erected.

Northvolt has set its sights on establishing a formidable workforce of 4,000 employees at its Skelleftea plant. Not content with expanding within Sweden, the company is also exploring opportunities for growth in Poland, Norway and even the U.S.

While the American battery industry is stronger than its European counterpart, it still lags behind China’s dominance. Carlsson said that Northvolt’s expansion into the American market would be a strategic decision due to the incentives offered through the Biden administration’s Inflation Reduction Act, which includes tax breaks and other advantages.

Berlin has previously also offered Northvolt a subsidy package worth around $1 billion or €916 million to build a plant in Germany, which Northvolt has agreed to. However, it still maintains its interest in establishing a plant in the U.S. Carlsson believes the expansion to be important, especially given Europe’s heavy dependence on China for critical raw materials such as lithium and cobalt, essential for battery production.

According to Carlsson, Northvolt possesses the technological capabilities to compete with China’s battery manufacturers. However, he acknowledges that Asian companies excel in scaling up operations, which allows them to manufacture batteries in larger quantities and faster.

“This is where we need to just be learning faster and be better,” Carlsson said.