Why is battery manufacturer Northvolt struggling?
Swedish battery maker Northvolt, which also has production sites in Poland and Germany, has announced plans to axe 1,600 jobs, amounting to roughly 20 percent of its workforce. The company cited production problems and the loss of a two-billion-euro order from BMW as well as falling demand for electric cars and fierce competition from the Chinese as reasons for its decision.
Failure to boost production
Northvolt was unable to cover the demand for its products, laments Kauppalehti:
“Even if the company's liquidity crisis is due to hesitation and a lack of confidence on the part of its financial backers, the real cause is that it wasn't able to increase its production at the Northvolt plant in Skellefteå to the required levels. ... The company has tripled its production of lithium-ion batteries to 60,000 units per week, but this only represents 5 percent of the plant's total capacity. It's true that sales of electric cars in Europe have collapsed, but Northvolt is partly responsible for this because the car factories that had ordered the batteries were unable to sell cars without them.”
Money flowing into the wrong pockets
Dagens Nyheter complains that subsidies are going to the wrong sectors:
“Those who have emitted carbon dioxide have not had to pay for the climate costs they have incurred. The world's governments still spend around 30 trillion crowns [around 2.65 trillion euros] per year on subsidies that promote global warming and destroy the climate. Given the urgency of the situation, a lot of money is being spent, both privately and publicly, on solutions that don't work and on actors who aren't up to the task. That's the lesson we should learn from Northvolt.”
Companies must be allowed to fail
Expressen puts its faith in market forces:
“The government can play an important role in supporting companies. It can ensure that there is a skilled workforce, innovative research, good infrastructure, reasonable taxes and a stable energy supply. But it should avoid trying to save companies that are in crisis as much as possible. ... China's state subsidies for battery production certainly pose a major competition problem. But that can't be solved by little Sweden trying to save a single company. The strength of the corporate sector also lies in the fact that companies are actually allowed to fail.”