The charge of the lights out brigade

Revving up for a $20 billion float one moment, bust 12 months later — or at least limping into Chapter 11 bankruptcy protection. The story of Swedish battery maker Northvolt is, among other things, a tale of corporate hubris. But it also has wider lessons. And not least for Rachel Reeves’s plans to turn Britain into a “clean energy superpower”.
Founded in 2015 by two former Tesla executives, Northvolt was Europe’s best-funded private start-up, financed with $15 billion of debt and equity. It was backed by car and investment industry heavyweights, notably Volkswagen and Goldman Sachs. And, unlike the UK’s risible Britishvolt, which swiftly ran out of juice, Northvolt had contracts with vehicle makers for its batteries — $55 billion of them from the likes of BMW, Scania, Volvo and VW.
Yet, last week when it filed for Chapter 11 in the US, it was down to $30 million cash — only enough for a week — having burnt through $2 billion this year alone. Its debts stood at $5.8 billion.
• Scottish Mortgage ‘£315m out of pocket’ after Northvolt collapse
Under its co-founder boss Peter Carlsson, Northvolt was nothing if not ambitious. It aimed to take on the established Chinese players, not least CATL and BYD, and create a homegrown European gigafactory champion — and all from Skelleftea, an outpost in Sweden’s Lapland.
Yet, the sub-Arctic location was just one of many problems. Its site brought clean energy to fuel the plant but also deterred the talented execs required to manage it. Then, Carlsson did some prize run-before-walk stuff. Before production had even begun in 2021, he was planning a second Swedish factory and plants in Germany and Canada, alongside a recycling centre in Sweden and an energy storage facility in Poland.
Still, the big problem stood out: that its existing plant, with capacity to make 16 gigawatt hours of batteries a year, or enough to power 270,000 cars, was running at just 1 per cent of potential output. That wasn’t helped by it being staffed by 100 different nationalities, unfamiliar with some equipment. Indeed, cynics claim that China deliberately sold it dodgy kit.
On top, came tragedy. Two workers died in accidents at the plant late last year, while there were three more unexplained employee deaths in early 2024 away from the factory. Northvolt has found no connection between them.
• Battery maker Northvolt to axe 1,600 jobs in effort to cut costs
Arguably, though, it was the decision of BMW, an early backer, to axe a €2 billion battery contract in June that set the wheels in motion for Chapter 11. Carlsson, who quit after the filing, bowed out admitting mistakes but also pointing to “hesitation and questions on the speed of the transition from carmakers, from policymakers and from the investment community”.
And, maybe, this is essentially a Northvolt story. Yet, when you see Reeves borrowing £100 billion at the budget for a five-year infrastructure splurge, much on green energy, it does beg questions. What precisely are the projects? And what’s the risk that taxpayers’ money gets wasted?
Take the government’s black box invention, Great British Energy, home of £8.3 billion of public money. It says it “can help clear a path for those emerging technologies which could revolutionise the entire sector”, including “floating offshore wind, tidal, hydrogen generation and storage, and carbon capture”.
Yet, however laudable the ambition, new technologies come with supercharged financial risk. Northvolt is proof of that.
It’s all relative. The Financial Conduct Authority has just been branded “incompetent at best, dishonest at worst”, by MPs and lordships from that mouthful of an outfit, the all-party parliamentary group on investment fraud and fairer financial services. So, how lucky for the regulator’s boss Nikhil Rathi that Travis Klein, an ex-trader from Macquarie Bank, has come along to bring a bit of perspective.
The FCA has just banned him and fined the Aussie bank £13 million for something that clearly counts as “acting dishonestly”: booking 426 fake trades between June 2020 and February 2022. And all by using his knowhow of Macquarie’s “ineffective systems and controls”.
• How Macquarie’s rogue trader lost $58m
Klein, who would also have been fined £72,000 if he hadn’t pleaded “serious financial hardship”, was on the bank’s “metals and bulks trading desk” in London, primarily dealing in freight, iron ore, steel and coal derivatives. There, he breezily ran up so many losses in his freight book that he was “benched” by his superiors — told to “take time out” from fresh trades while he de-risked his positions. Instead, to prove he’d quickly cut the risk in his book, he registered tons of fictitious trades.
In doing so, while keeping trades below a $50,000 alert threshold, he used two strategies. First, he left them open for a few days on the Macquarie Treasury System before cancelling them. But that triggered questions from the office. So, he entered them with a future clearing date, which he repeatedly amended.
Between June 2020 and December 2021, he made 9,269 “cancellations, amendments and backdates” out of 13,311 on the entire bulks desk. And, still, the bank didn’t notice. Hence the fine on top of the $57.8 million costs of unwinding his fake trades. Anyway, a nice bit of dishonesty to go with the MPs’ report.
Two neat lines from John Roberts, the boss of fridges-to-phones group AO World. First, that summer sales were a bit “Morecambe and Wise” — “all the right volumes, just not in the right categories”. Second, that the chancellor’s increase in employer NICs would “hurt those on the lowest incomes the most”, given the extra costs to business would “drive inflation”. If she hadn’t idiotically boxed herself in, Rachel Reeves could have raised similar sums in a far more progressive way: a penny or two on income tax.