Summarize this content to 2000 words in 6 paragraphs in Arabic Northvolt’s sub-Arctic battery factory in northern Sweden was meant to symbolise Europe’s green fightback against China and the US. Instead, the start-up is in danger of turning into an emblem of the continent’s failure to stay in the race.The Swedish battery company has raised more capital than any other private group in Europe — more than $15bn in equity, debt, and government support. It is now struggling to secure funds as it tries to ramp up production at the gigafactory in Skellefteå while scaling down on other projects and cutting jobs.“It’s extremely difficult to get through the Valley of Death for start-ups when they’re trying to scale up. And the valley is deepest for battery cells. You’re burning through a lot of cash very quickly,” said Lars Lysdahl, battery expert at consultants Rystad Energy. “The competition from the Chinese is very intense.”The stakes are high, and not just for Northvolt. The European Commission made the battery sector one of its industrial priorities, crucial to supporting the all-important automotive industry as it faces up to a transition to electric vehicles that China is so far winning.“There is a vicious circle in markets that is affecting investors and governments,” said one person close to Northvolt. No carmakers were abandoning electric vehicles, but they were delaying their plans and deliveries, the person added.On the same day that Mario Draghi, the former Italian prime minister and head of the European Central Bank, presented his report on European competitiveness earlier this month, Northvolt scaled back its ambitions dramatically. It said it would look for buyers or partners for its materials, recycling and energy storage businesses.Its Skellefteå factory, set in the far north of Sweden to benefit from an abundance of renewable energy, has a technical annual capacity of 16 gigawatt hours. But in 2023 it produced significantly less than even 1GWh, the level needed to power about 17,000 cars. Boosting production is a complicated and expensive process that affects most battery projects, but the extended delays have hurt revenues and now threaten its future expansion.“The ramp-up is taking a lot longer than initially planned, and there’s a long way to go,” said the person close to Northvolt.Peter Carlsson, Northvolt’s chief executive and co-founder, told the Financial Times in July that in the first quarter it had produced about 15,000-20,000 cells a week in Skellefteå and needed to reach 100,000 a week by the end of the year to be in the “1GWh space”. In 2025 with “all lines fully operating, fully functioning . . . a handful” of GWh should be possible. Profitability could be reached in 2026, he added.Northvolt produced its first battery cell in Skellefteå in late 2021, but its low capacity usage has meant that it has been unable to come close to the prices offered by Asian rivals such as CATL and BYD of China, Panasonic of Japan and LG and Samsung of Korea, which dominate the battery industry. “We in Europe need to get our shit together if we want to have a chance to be competitive going forward,” said Greger Ledung, battery research expert at the Swedish Energy Agency, an early backer of Northvolt.“Batteries are such a central technology, you can’t opt out of it. You can’t have a transport industry, a defence industry in the future without having secure sources of batteries,” he added. Ledung said that the Draghi report had underlined the importance of Europe being able to compete with Chinese groups that are “heavily state financed”. Nevertheless, Sweden’s prime minister this week dashed the hopes of a state rescue of Northvolt, ruling out the government becoming a shareholder, noting it was up to private investors and the company to solve matters.Founded in 2017 by two former Tesla executives, Northvolt has captured more than $50bn in orders from Europe’s leading carmakers and industrial groups, many of whom have also become shareholders in the Swedish company. At the end of last year, Volkswagen was its biggest shareholder with a 21 per cent stake while BMW held just under 3 per cent.Northvolt has raised $4.5bn in equity and $9.3bn in debt since its founding as well as $3.8bn in government support from Germany and Canada to build future gigafactories. But it made a net loss of $1.2bn last year, four times’ higher than in 2022.Equity on its balance sheet has almost halved from $3.9bn at the start of 2022 to $2.1bn at the end of 2023 while it also has $3.8bn of convertible debt. It had cash and cash equivalents of $2.1bn in 2023, down $400mn in a year.Delays at the factory started with the Covid-19 pandemic, but intensified after two workers died in Skellefteå in 2023, causing an almost total halt in production that particularly affected deliveries to Scania, the Swedish truckmaker.This year has also been punctuated by the mysterious deaths of three seemingly healthy Northvolt workers, who died away from the factory. A police investigation is under way, but Northvolt has said it has found no evidence of foul play or any connection between the deaths.Beyond the tragedies is a sense of a start-up having over-extended itself. As well as the plant in Skellefteå, Northvolt has been planning another factory in Gothenburg in a joint venture with Volvo Cars, and new gigafactories in Germany and Canada, all of which could now be delayed. Northvolt has halted a plan to build a factory in Sweden producing cathodes, a key battery component, and put its energy storage solutions plant in Poland up for sale. Advanced research into batteries for aeroplanes in the US has been stopped while it is pausing its cathode and recycling work in Skellefteå.“They were trying to do too many things at the same time, they had too many plans,” said Lysdahl. “If you look at how the Chinese, Japanese and Koreans have built it up, they only do cell production first, not everything all at once.”Ironically, Northvolt’s pausing of its work on materials means its dependence on China and Korea will increase, as suppliers there have a virtual monopoly in the cathode market.All this comes against a backdrop of slower demand for electric vehicles. Volvo this month abandoned its plans to sell only EVs by 2030 while VW is considering closing German factories for the first time.Northvolt insiders say that this is complicating its current, much-delayed fundraising as customers are scaling back their own need for batteries. It has imposed a ban on expenses and unnecessary travel as it seeks to conserve cash.But the start-up has been trying to combat rumours swirling around Sweden about its financial position and more. This week, it was forced to deny that it might not pay salaries this month, insisting that it needed its workers for the ramp-up. Insiders say any job cuts will be lower than the 20-30 per cent of staff that might be expected at a mature company, although the exact number is still to be confirmed.For now, the eyes of carmakers, European policymakers and rival battery manufacturers are firmly on northern Sweden and whether Northvolt can pull it off.“What does Europe want to be?” said another person close to Northvolt, before adding: “I want my kids to grow up somewhere where there are a lot of jobs.”
