Batteries, Northvolt explore partnership with Chinese giant Catl

In the arms of the enemy? The (failing) Swedish car battery manufacturer Northvolt has reportedly entered into negotiations with Chinese industry players, including the world's number one, China's Contemporary Amperex Technology Co. (Catl). The Swedish newspaper Dagens Nyheter wrote that the two companies had already started super-secret negotiations last summer, when a red light had been lit on Northvolt's financial crisis. In June, in fact, Bmw had revoked a billion-dollar order, perhaps the coup de grace. Preliminary discussions between the Swedes and the Chinese were to take place at Catl's headquarters in Ningde, China.

Last week, the manufacturer that in the eyes of the world represented the European hope for a perhaps impossible run-up of the Old Continent towards self-sufficiency in car batteries (the Chinese have control of the necessary technologies and materials) filed for Chapter 11 bankruptcy protection in the United States. A desperate attempt to obtain rescue funding (initially 330 million, but now more than a billion euros are needed for the company to continue as a going concern) had just failed, partly due to resistance from the main shareholders, Volkswagen and Goldman Sachs, who wrote down their respective holdings.

By the end of September, the Stockholm-based company, founded in 2016, had laid off 1,600 employees, a fifth of its global workforce.Outgoing ceo (who is also the co-founder) Peter Carlsson had stated earlier this month that potential projects in Asia were part of the speculation to find a solution to the company's crisis. And the accounts? In 2023, Northvolt's turnover had risen to EUR 120 million, after almost EUR 100 million the year before. A drop in the ocean of losses. Last year alone the red exceeded one billion. And then a mountain of debt. At the time of the Chapter 11 petition, they exceeded 5 billion, while the remaining liquidity was 30 million, enough for one week.

Now the white knight could be Chinese. Not without a toll to pay. With a global market share of over 37%, Catl is not a new name in Europe. The giant, which supplies batteries to all the major Western car manufacturers, has already achieved a rather bulky presence on the continent. In 2022, it opened a plant in Erfurt, Germany, while a factory in Debrecen, Hungary, is under construction for an investment of EUR 7.6 billion and a monstrous annual production capacity of 100 GWh, due to start by 2025. Northvolt has not yet managed to reach the planned capacity of 16 GWh at its main plant in Sweden, Northvolt Ett, a site created in a remote mining region just below the Polar Circle.

Stellantis, a year ago, also signed a memorandum with Catl for the supply of locally produced Lfp (lithium-iron-phosphate) batteries. This agreement could evolve into a joint venture, highlighting the importance of industrial synergies to address industry challenges. Meanwhile, the Automotive Cells Company (Acc) project, in which Stellantis participates with Mercedes-Benz and TotalEnergies, is encountering obstacles. After the completion of the gigafactory in France, plans for plants in Germany and Italy (Termoli) have been put on hold, highlighting the difficulty of competing with Asian manufacturers in terms of cost and production scale, especially while demand for electric cars in Europe is weak: this year's growth is estimated to be close to zero, while the Chinese market is travelling at +30%.