Northvolt Labs, December 2019 [Photo by Anders Utbult / CC BY 4.0]
The Swedish advanced EV battery maker Northvolt—once lauded as the best-funded start-up in the European Union (EU)—was purchased by Lyten, an American battery company, in early August. The takeover came after months of bankruptcy proceedings involving Northvolt in both Sweden and the United States.
For many years, Northvolt was seen as a critical part of European and American efforts to create an EV battery supply chain relatively independent of East Asia. Today, East Asian countries control an estimated 80 to 85 percent of global lithium-ion battery production, with China alone accounting for about 75 percent. The European imperialist powers in particular promoted Northvolt with substantial government subsidies to strengthen their independence from the United States in the emerging “clean energy” economy.
Over the past year, however, it became increasingly clear that Northvolt’s production facilities were facing serious industrial problems: high defect rates, extremely low factory output and the relentless burning of cash. This culminated in the company’s bankruptcy filings—first in the US in November 2024, and then in Sweden in March 2025.
At the height of Northvolt’s crisis, the company was rumored to be flying in Chinese battery technicians and engineers on a weekly basis to perform damage control on its factory machinery, critical sections of which had been imported from Wuxi Lead Intelligent, the world’s top supplier of the machinery. The episode underscored how far European companies had fallen behind Chinese producers in the race to dominate the EV market.
Lyten, a Silicon Valley-based start-up backed by investors such as Stellantis, FedEx, Honeywell and McKinsey, is acquiring Northvolt’s main assets at a steeply discounted but undisclosed price. This includes the giant gigafactory in Skellefteå in the north of Sweden, the company’s research facility in Västerås outside Stockholm and a planned plant in Heide, Germany. Lyten’s chief executive Dan Cook has pitched the deal as part of a broader effort to establish secure local supply chains in both Europe and the United States, citing Northvolt’s existing strong relationships with Western car companies.
Unlike Northvolt, which concentrated on conventional lithium-ion batteries for the EV market, Lyten specializes in lithium-sulphur technology, a chemistry it claims is cheaper to produce and offers higher energy density. The combined company will now pursue both.
The bankruptcy of Northvolt, followed by its acquisition by an American company, underscores several interrelated economic and geopolitical realities.
First, the United States and Europe, despite significant efforts and tens of billions in investments and subsidies, remain markedly behind China’s rapid development of EV batteries. Between 2020 and 2024, China experienced a meteoric expansion of its car industry, growing exports from under 1 million to 5.7 million vehicles, outpacing every other country, including Germany and Japan. Much of this growth came from electric vehicles, made possible by China’s domination of advanced battery production and its control over the critical minerals needed to produce them.
Despite years of promises, the US and EU remain far behind in electric vehicles. China now controls “the entire EV supply chain—from mineral mining to battery development, car manufacturing, operating software development, and even car shipping,” according to the Center for European Policy Analysis. Six of the world’s top 10 EV makers are Chinese, and BYD has already surpassed Tesla as the world’s largest seller. Some Chinese EVs now sell for under $10,000—a fraction of the cost in Europe or America—and are only kept out of those markets by steep tariffs.
Meanwhile, the sale of Chinese EVs outside Western markets is undercutting the established car companies. A key issue in Volkswagen’s current troubles is that the Chinese market, long its main driver of profits, is now turning away from European and American brands toward Chinese cars.
Collectively, China’s EV dominance poses a critical problem for American imperialism and its former European allies.
Large sections of the US and EU ruling class recognize that the energy transition will inevitably make fossil-based cars and trucks increasingly expensive and outdated. As Rystad Energy, one of the world’s leading oil and gas consultancies, has noted, “global petroleum reserves are insufficient to support oil demand if there is no transition to electric vehicles.” In other words, the shift to EVs will be driven not only by demand (EVs inevitably becoming cheaper and higher performing) but also by supply constraints, as the cost of oil is expected to climb to new highs over the next quarter-century despite the relative lull today.
If the United States and Europe fail to develop their own domestic supply chains for affordable, advanced EV production, including batteries and critical minerals, they risk becoming increasingly beholden to China, especially as pressures mount to move global production away from combustion engines. This both undercuts Washington’s drive toward war with China and at the same time accelerates it as the US seeks to secure its position before the global era of oil and gas fades away.
Meanwhile, the deepening rift in transatlantic relations has further complicated a coherent strategic industrial policy. The constant lurching between support for fossil fuels and renewables within the American ruling class is not merely the quirk of a passing administration, but a reflection of the deeper irrationality of capitalism itself—its anarchic competition, both among rival sections of the capitalist class and between nation states.
Lyten’s purchase of Northvolt underscores the fact that American imperialism and its erstwhile European allies increasingly view each other as opponents. What was initially promoted as a joint transatlantic push to break free of China’s dominance has developed into US-based companies moving to scoop up European assets at a massive discount, while Brussels struggles to hold its industrial projects together. To put things in perspective, Northvolt was funded with around $25 billion of capital but will likely be selling its assets for around $1 billion or less to Lyten.
The German ruling class touted Northvolt as leading the “green energy” revolution of the future. The Social Democrat/Green/Free Democratic Party federal government cooperated with the state government of Schleswig-Holstein to provide financing of €600 million for the Northvolt gigafactory in Heide, which is due to start production by the end of 2027. An additional €300 million in loan guarantees extended to Northvolt by the German government in 2020 remained outstanding when the company declared bankruptcy, meaning that over €900 million in public funds could be lost.
The Heide factory was hailed as a symbol of European energy independence amid the European imperialist powers’ waging of war against Russia in Ukraine and ending of cheap Russian energy imports. Then Federal Chancellor Olaf Scholz and Vice Chancellor and Economy Minister Robert Habeck were part of a high-profile delegation to celebrate the beginning of construction at the proposed factory site in March 2024. Now, the question of whether the factory will ever commence production remains open. Only its foundations have been completed to date.
The broader crisis facing European capitalism was expressed in last year’s Draghi report on European competitiveness, which warned that Europe faces an “existential challenge” as it falls further behind both the US and China. Growth in Europe has slowed to near-stagnation, energy costs remain several times higher than in the US, and the EU’s fragmented financing system has prevented the scale of investment needed in advanced technologies.
An August 15 Wall Street Journal article described the growing “domination” of US investors over European financial markets as an “emergency” for Europe. Noting the tendency of European companies to list their main operations in the US, the Journal pointed out:
So far this year, according to Dealogic, six companies have gone public in the U.K., raising $208 million, the lowest level in three decades of data. It isn’t much better across the English Channel, despite surging stock markets. Initial public offerings in continental Europe have nearly halved in value compared with last year. Fundraising in the U.S., meanwhile, has jumped 38% to around $40 billion.
Northvolt’s collapse is a symptom of the structural weakness of European capitalism and contributes to the growing resentment within the European ruling class at its dependency on the United States, especially when it comes to the question of Ukraine, armaments and advanced technologies, such as AI and EVs.
At its height, Northvolt’s main factory in northern Sweden employed some 4,000 workers. The mega factory was seen as underpinning a broader regional development of the north, a scarcely populated area being remade as a hub for renewable steel and EV production, based on cheap hydropower. With Northvolt’s bankruptcy, thousands of those jobs vanished, taking down with them thousands of other businesses and livelihoods in the area. Reportedly, some of these jobs may now return if Lyten ramps up production. However, when Lyten previously bought Northvolt’s Polish battery-pack plant, it actually cut further staff.
Meanwhile, Chinese carmakers continue to make breakthroughs. In 2025, BYD announced a new charging system that could power a 249-mile battery in just five minutes. With that said, even as Chinese EVs set the global pace of the industry, the intensity of competition in China—combined with overproduction and a flattening of demand growth—points toward a new wave of bankruptcies, as weaker firms are forced out and the industry consolidates.
Ultimately, the industrial conflict over critical minerals and EVs, expressed in Lyten’s purchase of Northvolt, exposes the irrationality of capitalism itself. At the very moment when global cooperation is most needed to build a renewable future, the great powers are instead sharpening their knives, driving the transition deeper into rivalry, confrontation and war. The working class in every country will bear the main burden through job losses and attacks on wages and conditions to improve “competitiveness.”
Sign up for the WSWS email newsletter
