Is Sweden’s green tech in trouble?

This story was produced by our colleagues at the BBC.

A crisis at one of Sweden’s most successful green tech startups is at risk damaging the country’s reputation as a world leader in climate technologies. Northvolt opened Europe’s first electric battery factory in 2022 and planned to open more plants in North America and Germany. But over the last few months, it’s laid off around 1,600 workers and filed for bankruptcy in the U.S.

Northvolt’s first factory opened to great fanfare in Skellefteå, a small city in northeast Sweden, but is in trouble just two and a half years after the doors opened. Mass layoffs begun in September.

Just across the street from the factory, there’s a big recruitment event aimed at Swedish and international workers.

Hunter Gwartney, 28, moved to Sweden from Canada to work at Northvolt and said it’s been a bumpy ride.

“My last day is the middle of January. But as it stands right now, I have no project to work on, so it’s very slow,” he said. “I just go into work, say hi to people and then leave.”

Once Gwartney’s contract ends, he’s got just three months to find a job before his work permit expires.

“I would love to stay in the start-up world, but in order to sustain a visa, I’m sure I will have to step into something not aligning with that,” he added.

Big financial troubles are behind Northvolt’s cutting of its workforce. Last year, it reported losses of more than $1 billion. The company failed to deliver on production targets in parallel with a cooldown in demand for electric vehicles. In June, BMW pulled a major order, and soon after the company said it was cancelling its plans to expand in Germany and the U.S.

Northvolt didn’t respond to multiple requests for an interview after it was approached by the BBC, but when CEO Peter Carlsson resigned last month, he told a news conference he hoped new leaders could rescue the business. Even if this happens, some — including Andreas Cervenka, one of Sweden’s leading business writers — fear the crisis has already tarnished Sweden’s reputation for innovation.

“Investors that lost money are going to be hesitant to invest again in a similar project in the north of Sweden,” he says.

But with a population of just ten million, Sweden needs more international workers to plug skills gaps for future green tech projects — and there are worries global talent will be put off by the experiences of Northvolt staff.

Not everyone’s pessimistic, however. Eva Andersson works for Clean Tech Nordics, which represents 15 green or clean tech investors in the region, and she said the sector still has a lot of potential.

“Last year alone, there were over 200 investments in Nordic clean tech in Sweden alone. It’s not just about one company,” she said.

And there are certainly lots of major green tech projects to point to in northern Sweden, including wind and solar power parks, companies working to make fossil-free steel and a collaboration between global company SKY-NRG and one of Sweden’s biggest hydro and wind energy providers, Skellefteå Kraft, to produce greener aviation fuel.

Skellefteå Kraft’s CEO, Joachim Nordin, thinks the region’s abundance of renewable energy will keep attracting industries and investors that want to tackle climate change.

“We are already almost 100% renewable up here [in northern Sweden], but on top of that we are among the cheapest places in the world for the electricity prices,” he said. “So if you combine those two things, it’s a huge opportunity.”

But even Nordin admits that Sweden — and the rest of Europe — is facing tough competition from the U.S. and Asia, which are also investing heavily in carbon-cutting technologies. So Sweden may need to put its foot on the gas (fossil-free gas, that is) to speed up momentum in the sector and prove it can move past the Northvolt crisis.