· 2 min read
Illuminem summarizes for you the essential news of the day. Read the full piece on The Economist or enjoy below:
🗞️ Driving the news: Northvolt, Europe's most-funded battery startup, filed for bankruptcy on November 21st, with its CEO resigning the next day
• Despite raising $15 billion, including $5 billion in public funding, the company’s main factory operated far below capacity, leading to financial collapse
• Now, Northvolt faces potential breakup and acquisition by global competitors, including Chinese firms
🔭 The context: Northvolt was seen as a symbol of Europe's industrial policy and green ambitions, backed by governments, major investors like BlackRock, and auto giants like Volkswagen
• However, overexpansion, operational inefficiencies, and failure to compete with Asian battery leaders like CATL contributed to its downfall
• It highlights risks tied to over-reliance on government backing and overconfidence in domestic industrial "champions"
🌍 Why it matters for the planet: Northvolt's failure underscores the challenges in building sustainable green tech industries without robust commercialization strategies
• Governments spent billions supporting a company that fell behind in a critical industry for clean energy transitions
• This raises questions about optimizing public funds for climate innovation
⏭️ What's next: Analysts suggest shifting from nationalist industrial policies to welcoming foreign direct investments to foster technology transfer and growth
• Asian firms like CATL and LG Energy Solution are already expanding in Europe, offering models for collaborative industry development
• The West may need to adopt a more global approach to catch up in clean technologies
💬 One quote: "Governments often base their industrial policies on the ‘infant-industry’ argument... if they are too far behind, they may never catch up" – The Economist
📈 One stat: Northvolt secured $50 billion in pre-orders but still couldn’t scale production effectively
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