The company's overconfidence in its own abilities borders on hubris

Karolina Ekholm

Hubris behind Northvolt's crisis

Andreas Cervenka

Reporter and economic commentator

This is a commenting text. Analysis and positions are the writer's.

Published 16.34

That a company that disposes of two billion a month can get into trouble should not come as a sensation. The responsibility for Northvolt's crisis falls heavily on the founders and billionaires Harald Mix and Peter Carlsson. Their gambling makes it difficult for all the entrepreneurs who are trying to save the climate.

How do you know that a company is a high-risk project? When the Prime Minister is required to comment when things start to go badly.

On Monday, when Northvolt announced that another 1,600 employees had to leave the company, Ulf Kristersson explained that it is not appropriate for the state to invest money in the crisis-ridden company.

"There are no guarantees that every company or new technology will succeed," said Kristersson to Ekot.

He is very right about that. It is completely normal for a newly started company to have a bit of a rough start.

So why does Northvolt's problem get such big headlines and become an issue that, according to Ulf Kristersson, has been discussed at government level between Sweden and Germany?

Because it is an investment that is a couple of thousand times bigger than a normal start-up.

In total, Northvolt has collected SEK 150 billion from investors, making it Europe's largest unlisted company. With public grants and loan guarantees, the invested amount ends up at over 200 billion, even if all the money has not yet been paid out.

The founders of Northvolt, the venture capitalist Harald Mix and Peter Carlsson with a background at Tesla, managed to deceive the outside world for a long time that Northvolt was a low-risk project: insatiable demand for batteries, large pre-orders from customers and reputable investors.

In fact, it is and always has been a risky venture.

Northvolt is bleeding huge amounts of money.

During 2023, the company invested over SEK 2 billion every month.

Revenues throughout last year were just over 100 million a month.

It's a math that makes Northvolt extremely dependent on the constant infusion of more money. And thus made it vulnerable to the slightest setback.

Harald Mix and Peter Carlsson's business idea seems to have been based on everything going according to plan.

Northvolt has had an over-ambitious and expensive expansion plan in several countries at the same time, before production in Skellefteå has even started.

It is an overconfidence in one's own ability that borders on pure hubris. In reality, beyond the frosty prospectus to investors and municipal politicians, things can change.

And they have done that for Northvolt.

Much is the compan's own fault. The production has struggled with major problems that have meant delays, angry customers and several high-profile accidents.

Everything else depends on the outside world. The market for batteries has cooled dangerously as demand for electric cars has fallen. Other battery companies also have problems.

All of this has revealed just how tightly Northvolt has strung its bow.

The strangest thing about the company's crisis is that this should have been obvious from the start.

Among the investors are some of the most respected in the world, such as the investment bank Goldman Sachs and large pension funds.

They seem to have been enchanted by Harald Mix and Peter Carlsson who had a lot to gain from Northvolt's rapid expansion.

According to what Aftonbladet has learned, Harald Mix has invested less than 200 million in Northvolt and owns just under eight percent of the company, a shareholding which, according to the company's latest valuation, is worth nine billion.

According to Dagens Industri, Peter Carlsson, who owns seven percent of the shares, has sold shares for 200 million in recent years.

Expect that the other investors who pushed for billions will put hard pressure on Harald Mix and Peter Carlsson will inject more of his own money.

But even if they do, it doesn't go far enough. Northvolt needs tens of billions.

So who will come to the rescue?

The largest owner is the giant Volkswagen, but they have their own problems right now and are going to close down factories in Germany. Throwing more money into a Swedish project would not be popular at home.

Goldman Sachs is the second largest owner, but does not exactly have an emotional connection to either Northvolt or Sweden. Other major owners are a number of pension funds including the 1-4 Ap-fonden. Should they risk even more of the pensioners' money? It is not obvious.

The National Debt Office has issued credit guarantees to Northvolt for a total of 15 billion. The guaranteed loans have not yet been used, but that does not mean that taxpayers can relax.

The fact that, according to Dagens Industri, Director General of the National Debt Office Karolina Ekholm is in close text contact regarding developments in Northvolt is an indication of that.

A much bigger question than the government billions is how a possible crash will affect Skellefteå, where Northvolt is a key part of the municipality's future.

Or as union ombudsman Pierre Pettersson tells the newspaper Arbetet: "If things go wrong, Skellefteå will become the largest desert landscape in Norrland".

Northvolt can still survive.

But the company's arrogance will make it harder for other companies to raise money for ideas aimed at slowing climate change.

It is a very high price to pay.

5 points about Northvolt

Aftonbladet

Published 15.20

The "Northvolt effect" spread faith in the future all over Skellefteå.

Now 1,000 people will lose their jobs.

Here are the tours around Europe's largest battery factory.

1. The news hit

In autumn 2017, it became clear that Northvolt would choose SkellefteåSkellefteå as the location for a new factory of lithium-ion batteries. The project is estimated to cost up to four billion euros until 2023 - and 2,500 jobs will be created.

2. The "North Volt Effect"

In June 2022, Europe's largest battery factory will be inaugurated in Bergsbyn's industrial area with an exercise race in the area. "We are on the first mile of a marathon," says CEO Peter Carlsson.

The establishment of the battery factory creates ripples on the water all over Skellefteå, the municipality writes in a press release in August 2022. A construction boom, investments in infrastructure and a great faith in the future follow in the wake of the factory construction. Something described as a "Northvolt effect".

3. The deaths

In 2024, four people who worked at the battery factory will die. Three of them die inexplicably in their homes after work.

The police's environmental crime group is launching an investigation into the connection between the deaths to determine the cause. So far, it has not been possible to clarify what is behind it.

4. Worry clouds in the battery sky

From the summer of 2024 onwards, the clouds have gathered over Northvolt. The high costs mean that parts of the factory are forced to close. At the same time, the staff are informed that they may not receive their salary. Concerns are rising that employees will lose their jobs.

Northvolt's factory in Skellefteå. Photo: Niclas Hammarström

5. 1,600 positions removed

On Monday, September 23, Blitzin calls Northvolt to a meeting with the staff at the factory in Skellefteå. 1,600 people will lose their jobs, of which 1,000 in Skellefteå, CEO Peter Carlsson announces.