The electric vehicle industry has received a major setback as giant EV battery maker Northvolt shuts down amid bankruptcy.
The Swedish company that was founded in 2016 by Peter Carlsson and Paolo Cerruti, two former employees of Tesla, was regarded as Europe’s answer to rival Asian giants BYD and CATL.
Northvolt filed for bankruptcy on Wednesday 12 2025. In its statement, the EV battery maker said it ‘had explored all available means to secure a viable financial and operational future for the company.’
The company pointed at rising capital costs and geopolitical instability as the man challenges it had faced in the recent past.
It said these challenges had resulted to fluctuating demands and supply disruptions.
Reducing Demand for EVs
Unlike Africa where there is a rising demand for EVs, the European market has been declining.
For instance, the largest automaker in Europe, Volkswagen, was reported to be considering closing some factories, cutting jobs and freezing employee wages in Germany. Business Insider revealed that the company’s executive Daniela Cavallo, head of Volkswagen’s general works council, had told employees in October 2024 even though the company did not comment on the report.
Ford had followed with an announcement in November to fire 4,000 employees by end of 2027.
Mercedes-Benz meanwhile announced in mid-March 2025 that there would be staff buyouts and half-salary reductions to improve earnings following a decline in sales in 2024.
Which way forward for Northvolt
A Swedish court has appointed a trustee to oversee the sale of the Northvolt and its assets.
Northvolt’s German and North American businesses will not file for bankruptcy in their respective jurisdictions. Still, the court-appointed trustee and company lenders will determine the future of the subsidiaries.
Since inception, the company had raised more than $15 billion from investors including Volkswagen, Goldman Sachs, BlackRock, Baillie Gifford, and the Spotify cofounder Daniel Ek.
The EV battery maker has however struggled with debt and operational inefficiencies even after making drastic executive changes late last year that included the creation of a Chief Transformation Officer role in July 2024.
The company has also heavily relied on Chinese equipment in its production processes.
