In a dramatic turn for the industry, Swedish battery maker Northvolt has filed for bankruptcy. Once viewed as Europe’s greatest hope for contesting Asian battery behemoths, this failure has dire consequences.

Established in 2016, Northvolt set out to give Europe an alternative to the battery makers of Asia. It secured over $10 billion in funding from major players such as Volkswagen. But production challenges and soaring costs stymied its growth.

Northvolt’s problems deepened in late 2023 when it filed for Chapter 11 bankruptcy protection in the U.S. to reorganize. It scrubbed attempts to fundraise, debts grew to more than $8 billion.

Production challenges and falling battery prices had been key challenges Northvolt faced, industry insiders said. Former employees raised alarms about management problems and safety lapses.

The stakes are high for all the failures at Northvolt. Losing key battery manufacturing capabilities in Europe increases dependence on imports from Asia.

The future of Northvolt’s Canadian project remains uncertain after the bankruptcy. With substantial investments already made, the future of Northvolt Six will depend on ongoing court decisions.

European policymakers must reset their thinking to accommodate Northvolt’s bankruptcy. And there could be calls for new incentives for battery startups or a partnership with Asian companies.