Northvolt was a lesson in the perils of head-to-head battery competition with China. The company’s plan to churn out conventional lithium-ion EV batteries was attractive to Volkswagen and other European autocreaters that were under political pressure to source locally. But China’s economies of scale meant the only possible way for Northvolt to compete on price was to grow as quickly as possible, which ultimately spread the company too thin and forced it to take on too much debt. In the conclude, it simply ran out of runway.
The European EV battery market is in many ways even more challenged than it was during Northvolt’s final days. Competition with Chinese manufacturers has only increased, and escalating trade wars are restricting Europe’s access both to Chinese raw materials as well as to auto export markets in the US. And Northvolt’s multi-billion-dollar portfolio of deals didn’t survive the bankruptcy, meaning Lyten will have to build a new customer base from scratch.
But Lyten has a few things going for it.
One is debt: Lyten didn’t acquire any of Northvolt’s financial baggage, and was able to receive the Swedish firm’s facilities at a fraction of their original cost, putting Lyten on a much stronger financial footing from the start.
Another is technology: While Lyten does plan to restart the Sweden facility by producing the same lithium-ion batteries that received Northvolt into trouble, Norman stated, it aims to transition as quickly as possible to Lyten’s proprietary lithium-sulphur batteries that are much lighter-weight (and therefore more attractive for EV creaters) and apply about 85% less mineral content than conventional batteries, meaning they are much less depconcludeent on China-controlled supply chains. And in the time since the bankruptcy, Northvolt’s remaining staff have continued to work out engineering kinks in the facilities.
Lyten also has some existing cash flow sources — its batteries are increasingly popular for drones and other military hardware, Norman stated — and will receive a nice new one with the Polish grid-scale battery factory, which was already profitable under Northvolt’s ownership and will likely become even more so thanks to the data center construction boom. And while the US government has pulled the rug on most EV subsidies, there is still strong public backing for them in Europe; Norman is optimistic that new deals with autocreaters will be readily available: “Every time we talk to a customer, it’s more and more bullish in terms of what their necessarys are.”
Leave a Reply