Northvolt, the Swedish battery startup that had been hailed as a potential rival to Chinese giants, has filed for bankruptcy in Sweden, marking a significant setback for Europe's ambitions to create a domestic battery manufacturing industry.

The company's bankruptcy filing comes after it had raised more than $14 billion in funding, but struggled to conserve cash and raise new funds to stave off insolvency. Northvolt had previously filed for Chapter 11 bankruptcy in the US in November, and has been racing to secure new financing and cut costs to stay afloat.

In a statement, Northvolt cited a series of "compounding challenges" that had eroded its financial position, including rising capital costs, geopolitical instability, supply chain disruptions, and shifts in market demand. The company had been burning through a reported $100 million per month, and had struggled to bring in revenue despite securing a $5 billion debt deal in January 2024.

Northvolt's fortunes took a decisive turn for the worse when BMW canceled a $2 billion contract in June 2024, citing the company's inability to deliver on time. In an effort to conserve cash, Northvolt laid off 1,600 employees and sold the assets of its Cuberg division, a Bay Area solid-state battery startup it acquired in 2021.

Despite these efforts, Northvolt was unable to reach an agreement with lenders to secure additional financing, and was ultimately forced to file for bankruptcy. The company's collapse is a significant blow to European countries and automakers, which had pinned their hopes on Northvolt as a key player in the region's battery manufacturing industry.

Today, most battery factories are built and run by Chinese, Japanese, or Korean companies, and Northvolt's failure will likely set back efforts to create a domestic industry in Europe. The company's demise also raises questions about the viability of Europe's battery manufacturing ambitions, and whether other startups can fill the gap left by Northvolt's collapse.

As the industry grapples with the implications of Northvolt's bankruptcy, analysts will be watching closely to see how the company's failure will impact the global battery market, and whether European automakers will be forced to look elsewhere for their battery needs. One thing is clear, however: Northvolt's bankruptcy is a significant setback for Europe's battery ambitions, and will likely have far-reaching consequences for the industry as a whole.