Electrification and Bankruptcies: Beyond the Simplism of State Policies

Previous article from the newsletter, week 02:

<---Who is harmed by the EU’s international policies?

The debate on the transition to electric mobility in Europe is often distorted by one-sided perspectives: opinions swing between those who see industrial policy as too aggressive, those who point to “unfair” Asian competition, and those who believe that massive public funding is sufficient to create technological champions.

Despite $14 billion in funding and full access to the European market, Northvolt has failed and is on the verge of collapse. One cannot even solely blame energy costs, as the Swedish factory was deliberately located to harness the region’s vast hydropower potential.

Competitiveness analysis highlights three critical areas that may reflect the challenges faced by many European industrial companies.

Fragmentation of Investments
The fragmentation of investments has dispersed resources across dozens of suboptimal initiatives, rather than concentrating them on a few strategic projects of continental scale. There has been an excessive focus on geographical expansion at the expense of innovation capacity.

Innovation and Decision-Making Processes
The comparison with competitors is telling: 8,000 total employees at Northvolt versus 21,000 R&D engineers at CATL indicate fundamentally different approaches. However, it is not just a matter of numbers: decision cycles in European companies are still too long, and the approach to research and development remains anchored in traditional models. The lack of a “fail fast, learn fast” culture, typical of non-European tech companies, prevents rapid and adaptive growth.---