Heavy snow blends with white thick clouds in Skellefteå, a riverside town in northern Sweden with a population of 78,000.
It is also the location of what was to become the largest and greenest electric battery plant in Europe, powered by the region’s abundance of renewable energy.
Swedish start-up Northvolt opened its main production facility here in 2022, after signing multibillion-euro deals with automakers including BMW, Volkswagen and Nordic truck maker Scania.
But it ran into major financial trouble last year, reporting debts of $5.8bn (£4.6bn) in November and filing for bankruptcy in the US, where it had hoped to expand its operations.
Around a quarter of the global workforce has been laid off since September, including more than 1,000 employees in Skellefteå.
“A lot of people have already moved out,” says 43-year-old Ghanaian judge Dey-Seshie, who moved to Skellefteå for work in Northvolt, after previously studying and working in southern Sweden.
“I have to secure a job in order to extend my work permit. Otherwise, unfortunately, I will have to leave the country.”
Many researchers and journalists following Northvolt’s decline share the view that it is at least partially caused by a global decline in demand for electric vehicles (EVs).
In September Volvo left its target to produce only electric vehicles by 2030, arguing that “customers and markets move at different speeds.” Meanwhile, China, the leader in the electric battery market, managed to lower Northvolt’s prices.
The lack of production targets (a key factor in BMW’s withdrawal from the €2bn deal in June), too-rapid expansion and the company’s leadership are also widely cited as factors fueling the crisis.
“Making batteries is a very complex process. It takes a lot of capital, it takes time, and apparently they just didn’t have the right staff running the company,” claims Andreas Cervenka, a business author and economic commentator for a Swedish daily. Aftonbladet.
At Umeå University, Madeleine Eriksson, a geographer who researches the impact of so-called “green industries”, says Northvolt presented a “save-the-world mentality” that impressed investors, the media and local politicians.
But this “now or never” approach, she argues, glosses over the fact that this is a risk-taking start-up that “never finished attracting investment.”
Northvolt did not respond to numerous requests from the BBC for comment on its decline or future plans.
The company hired German Marcus Dangelmaier from global electronics firm TE Connectivity to head Northvolt’s operations in Skellefeå from January, as it seeks to attract new investment.
Northvolt co-founder and CEO Peter Carlsson – a former Tesla CEO – resigned in November.
As the aftermath of the crisis continues, there are discussions about the potential impact on Sweden’s green ambitions.
Northern Sweden, called the “Nordic Silicon Valley of Sustainability” by the consulting company McKinseyit quickly gained a global reputation for new industries designed to accelerate Europe’s green transition.
The region is a center of biotechnology and renewable energy. In addition to Northvolt, high-profile companies include Stegra (formerly H2 Green Steel) and Hybrit, both of which are developing fossil-free fuel using hydrogen.
But Mr. Cervenka, an economic commentator, claims that Northvolt’s decline has damaged Sweden’s “very good brand” when it comes to green technologies.
“There was a huge opportunity to build this champion and to build this Swedish icon, but I think investors who lost money will be hesitant to invest again in a similar project in the north of Sweden,” he says.
Some local businesses say the publicity surrounding Northvolt’s crisis is already having a negative effect.
“I feel when I travel now – even to the southern parts of Sweden – and abroad, that people really ask me questions,” says Joakim Nordin, CEO of Skellefteå Kraft, a major supplier of hydro and wind power, which was an early investor in Northvolt.
Based in Malmö, southern Sweden, Cleantech for Nordics is an organization representing a coalition of 15 major investors in sustainability-focused start-ups.
Here, climate policy analyst Eva Andersson believes the nation’s long legacy as an environmental champion will remain relevant.
“I think it would be presumptuous to say that, okay, now we’re doomed here in the Nordics because one company went under,” she claims.
Cleantech for Nordic research suggests that in 2023 there were more than 200 investments in clean technology projects in Sweden.
Another study conducted by Dealroomwhich collects data on start-ups, indicates that 74% of all venture capital funding to Swedish start-ups went to so-called impact companies that prioritize environmental or social sustainability, compared to a European average of just 35%.
“Sweden is still punching above its weight in this sector. And I think we can expect it to continue to do so,” predicts Anderson.
There are growing calls for increased state aid to help Sweden maintain its position. The Swedish government refused to bail out Northvolt, suggesting that all startups, whether viable or not, should be subject to market forces, not bailed out by taxpayers. But as other parts of the world ramp up battery production and other carbon-reducing industries, the decision has been met with backlash.
“The US and China have huge support packages for green industry and they are definitely catching up and overtaking them in some sectors. And this is definitely a threat to be reckoned with,” Andersson claims.
Only 3% of global battery cell production currently takes place in Europe – according to research for the international consulting firm McKinsey – with Asian companies leading the market.
Sweden’s Minister of Energy, Business and Industry Ebba Busch argues that the answer is greater EU support rather than funding for individual governments.
Last month she he told Swedish television The situation at Northvolt was “not a Swedish crisis”, but a reflection of challenges across Europe when it comes to competitiveness in the electric battery sector.
But while the government insists it wants Sweden to play a key role in Europe’s battery industry and the wider green transition, it has been accused of sending mixed messages. The right-wing coalition that came to power in 2022 reduce gasoline taxes and diesel, i abolished subsidies for EVs.
“This is a politically very sensitive area,” says journalist Červenka. “The Swedish government is actually criticized internationally for not meeting its climate commitments. And that is a stark contrast to the image of Sweden as a pioneer.”
The BBC reached out to Busch’s media team but did not receive an interview.
Back in Skellefteå, where it is dark just after lunch, Joachim Nordin prepares to return home in the snow.
He says there is strong industrial will for Sweden to remain a role model for green technology, despite policymakers “not being as ambitious” as previous administrations.
The criteria that attracted Northvolt to establish its first plant in Skellefteå will also attract other major global players to the region, according to the energy company’s CEO.
“It’s almost 100% renewable energy up here… and that’s pretty unique if you compare it to the rest of Europe. But on top of that we’re among the cheapest places in the world for electricity prices. So if you combine those two things, it’s a huge opportunity .”
Skellefeå Kraft recently announced a collaboration with the Dutch fuel company Sky NRG. Their ambition is to open a large plant for the production of fossil fuel-free jet fuel (produced using hydrogen combined with carbon dioxide collected from biogenic sources) by 2030.
“The publicity surrounding Northvolt doesn’t help now, of course. But I hope it’s just something we’ll remember as a little bump in the road when we look back on this in 10 years,” says Mr. Nordin.
