After Northvolt, Europe’s battery path leads to China — or new tech frontiers

Fuelled by $15bn in financing, Northvolt was supposed to be Europe’s great battery success story — a homegrown champion capable of competing with Asian and American giants.  

So when Northvolt filed for bankruptcy last week, after months of job cuts, restructuring, and multiple failed attempts to raise more money, it dealt a massive blow to Europe’s ambitions to ramp up domestic production of lithium-ion batteries, which power everything from EVs to smartphones. 

In the wake of Northvolt’s precipitous fall from grace, everyone from politicians and investors to the company’s own employees has voiced their opinions on what went wrong. Among their explanations are stiff competition, overspending, allegations of mismanagement, and a lack of state support.  

Northvolt may be bankrupt, but the fight for a strong European battery ecosystem is far from over. That’s the consensus from several tech investors and startups we’ve spoken to in recent weeks.

Creating a sustainable and competitive battery value chain in Europe, though, will be littered with challenges. One of them — competition from the East — may be insurmountable.

The continent faces two clear options: collaborate with Asia’s industry giants or build a stronghold in the next frontier of battery tech.

China looms large

Northvolt set its sights on capturing 25% of Europe’s battery market by 2030, hoping to wrestle supply away from Chinese and South Korean companies. Together, these two nations supplied Europe with 90% of its batteries last year.

While Northvolt faltered — failing to meet its targets and losing key clients — Chinese battery firms forged one deal after another with European automakers. Notable among them were Gotion’s partnership with Volkswagen and CATL’s joint venture with Stellantis to build a €4.1bn lithium battery factory in Spain.

Asian battery manufacturers have been steadily expanding their reach into European startups, too. Gotion acquired a 25% stake in Slovakia’s InoBat in 2023. Founded in 2019, the battery startup has raised $400mn to date, with Gotion a major backer. 

“While Gotion and InoBat pursue very different strategies and are fully independent, InoBat has benefited from Gotion’s long track record, experience and know-how, helping to avoid fatal mistakes,” InoBat’s CEO and co-founder Marian Bocek tells TNW. 

Gotion and InoBat have formed a joint venture to build a €1.2bn lithium-ion battery plant in Slovakia, slated for completion in 2027. The batteries will be destined for EVs and electric aircraft. 

InoBat is building a smaller gigafactory in Slovakia to produce batteries for high-performance EVs, with testing already underway for European automakers, including Ferrari.

British solid-state battery firm Ilika is another European hopeful taking advantage of China’s battery superiority. Graeme Purdy, the company’s CEO, cited a lack of “Asian partnerships” as one potential reason for Northvolt’s downfall. “Global cooperation offers the strongest path to commercial success,” he tells TNW.  

Ilika is shipping its first samples to 17 automakers this year, the company said. Instead of building a gigafactory, the UK-based outfit plans to license its technology to other companies. Ilika has a long-standing research partnership with Japanese automotive giant Toyota.

For European startups, the appeal of partnering with East Asian battery makers is obvious. They have the tech, scale, and supply chain efficiency that Europe lacks. 

However, that reliance comes with risks.

Opportunities and threats

The dependence on Chinese companies has sparked several concerns. Trade disputes, geopolitical tensions, or sudden export restrictions could send battery supply chains into chaos or even sever existing agreements, leaving European firms scrambling for alternatives. 

Tom Johnstone, interim chair of Northvolt, has called on European politicians to invest heavily in local battery startups instead. “There’s a cost to pay for it, but there can be a bigger cost to pay for not doing it,” he told the Financial Times. He hopes Europe will “use the foundation” that Northvolt had provided to establish its own competitive battery industry.

Northvolt’s operations in Sweden are now up for sale. Volkswagen, Scania, and Volvo are all potential buyers, while some experts believe a Chinese company will acquire the business.  

Either way, Danijel Višević, partner and co-founder at Europe’s largest climate tech VC, World Fund, thinks European startups should focus their attention on cornering the market for next-generation battery chemistries, not lithium-ion cells.

“When it comes to lithium iron phosphate (LFP) batteries, China has won,” he says. “Northvolt should have realised that earlier — they moved to new innovative materials too late.” 

Recharging Europe’s battery sector

Louis Fearn, principal at InMotion Ventures, the investment arm of Jaguar Land Rover, argues that Europe ought to shift its strategy. “The way forward for Europe will be to focus not on challenging China, but on securing domestic supplies of raw materials and exploring frontier technologies.”

Europe’s emerging battery players could do well to bet on the next frontier of battery tech where the playing field is still open.

Kevin Brundish, CEO of Dutch battery maker LionVolt, agrees. He’s adamant that Europe’s expertise in next-generation battery tech is keeping “the dream of battery sovereignty within grasp”. 

“Our robust ecosystem of startups and scale-ups is already pioneering breakthrough technologies in silicon and lithium-metal anodes — innovations essential for next-generation high-performance batteries,” Brundish tells TNW.

LionVolt spun out from TNO’s Holst Centre in Eindhoven, the Netherlands, in 2020. The startup is working on a 3D lithium-metal anode that improves energy transfer in lithium-ion, sodium-ion and, in the future, solid-state batteries.  

LionVolt is one of an emerging cohort of startups looking to disrupt the status quo of battery manufacturing. LeydenJar, also from Eindhoven, makes silicon anodes that can store up to 10 times more energy than traditional graphite anodes used in lithium-ion batteries. 

Cambridge University spinoff Molyon has developed a lithium-sulfur battery that it claims delivers twice the energy density of lithium-ion. Sweden’s Enerpoly is building a factory that makes zinc-ion batteries for energy storage, which doesn’t rely on supplies of lithium. Netherlands-based CarbonX is developing alternative anode materials that could help wean Europe off China-controlled graphite. 

While most of these startups are focusing on subcomponents, there may also be a place for bigger players.

A route to battery independence

France’s Verkor was arguably the only European contender to Northvolt. Backed by Renault, Verkor has secured €3bn for a 16 GWh gigafactory in Dunkirk, set to produce batteries for 300,000 EVs annually when completed around 2028. 

“Europe can build an end-to-end value chain for batteries; in fact, it has to — batteries are vital components of both climate and defence technologies on which our sovereignty depends,” says Višević. 

For that, Europe will need to invest, otherwise its battery ambitions could end up going the way of Northvolt. That will require venture capital but also significant public funding.  

InoBat’s Bocek says that Europe needs to give automakers an incentive to buy local batteries, just like it did with feed-in tariffs for renewable energies a decade ago. “Financial support and fast-tracking of permitting is essential,” he says.  

Northvolt’s fall is a cautionary tale, but not the end of the road. If Europe wants battery sovereignty, it must act decisively, pouring funds where they’re needed most. While foreign powers like China will no doubt form part of Europe’s battery future for a while to come, the smartest move for Europe might not be to play catch up but to carve its own niche. 

Europe’s technological sovereignty will be a hot topic at TNW Conference, which takes place on June 19-20 in Amsterdam. Tickets for the event are now on sale. Use the code TNWXMEDIA2025 at the check-out to get 30% off the price tag.