🐤 Northvolt is the canary in the coalmine for Europe and North America
Vol 95
This newsletter aims to separate the signal from the noise for investment in all things sustainable transportation: Electrification, mode shift, active and public transit, and mobility aggregation, across both people and goods movement.
Reminder! Enduring Planet (where I serve as a venture scout) has launched Enduring Planet CFO, a trusted startup partner for bookkeeping, accounting, financial planning and analysis, and fundraising.
This week’s Deep Dive is about how Northvolt’s collapse should be a warning sign for the European and American climate community, whether in VC, project finance, policy or startup operations.
🌱STARTUP WATCH: Sustainable mobility startups (pre-seed or seed) to keep an eye on
Artemis Technologies (United Kingdom): Manufacturer of zero-emissions ferries
Bidirectional Energy (California, USA): Software for vehicle-to-grid
Clippership (California, USA): Autonomous, wind-powered cargo vessels
Coflow Jet (Florida, USA): Rigid wind sails for maritime shipping
FastCharge.Me (California, USA): Vertically integrated operator of charging networks for fleets and the public
FlyTahoe (California, USA): Electric ferry operator
Hansadrone (Germany): B2B software for the last 50 feet of drone delivery
Pulsur (California, USA): AI to help transit operators improve ridership numbers
Streetdock (United Kingdom): Operator of a zero-emissions last-mile delivery network
TrubAI (New York, USA): Software to help urban planners diagnose congestion patterns
💰FUNDING: Capital raises from startups previously featured in Startup Watch
Flipturn (Vol 43 plus 10 Women-Founded Startups to Follow in 2023) raised an $11M Series A led by CRV, plus Accel
tozero (Vol 65) raised an 11M EUR Seed Round from Nordic Ninja, Honda, In-Q-Tel, Global Brain, and others
Fun fact: Newsletter subscribers live in 86 countries. Holdout countries include Paraguay, Laos, Moldova, and Madagascar. Not yet a subscriber?
📰QUICK HITS: Notable news from the last two weeks
👩🏽⚖️Government, Policies & Cities
🦸♀️ In New York City, Gov Hochul earned redemption by aligning the stars to launch congestion pricing on Jan 5. This is an epic milestone, but expect lawsuits and retaliation from the Trump administration.
🇹🇭 Bangkok is considering its own congestion pricing program. Singapore was the pioneer, but uptake in the rest of Asia has been slower than in Europe.
⛴️ Hong Kong began testing its first electric commuter ferry and London launched its first electric ferry for tourism. Batteries, not hydrogen, are powering zero-emissions ferries right now.
🇸🇦 The CEO of Saudi Arabia’s planned city Neom abruptly resigned. The world’s largest construction project already had enough challenges.
🪙 The California Air Resources Board (CARB) has approved a new low-carbon fuel standard (LCFS). Critics protested the continued support for long-shot solutions like biogas, biofuels, and hydrogen at the expense of commercial solutions like EV charging.
🛜 After two decades, the US Federal Communications Commission (FCC) finally passed spectrum rules regarding cellular vehicle-to-everything (C-V2X) communication. This infrastructure protocol is a boon for everything from self-driving vehicles to active safety solutions for bicyclists.
🇷🇼 Rwanda wants to ban the registration of gas-powered taxi motorbikes in favor of electric. For more on how East Africa is a rising EV powerhouse, see the Deep Dive here.
🔬Markets & Research
🛩️ Emissions from private jets have grown 46% in 5 years. Hence why they’re a lightning rod for climate protests.
🙀 The US Environmental Protection Agency released its annual Inventory of US Greenhouse Gas Emissions and Sinks. The TL;DR remains consistent across reports: we’re reducing the emissions profile of the energy system fairly quickly and making painfully slow progress in transportation.
🗾 Foursquare has open-sourced its mapping data for 100M places of interest. For more on open-sourced maps, see the Deep Dive in Vol 62.
⛏️ The International Energy Agency released a report on the Recycling of Critical Minerals. Key conclusion: recycling can lower the need for new mining activity for things like EV batteries by 25-40% by 2050.
🛣️ Transportation for America has shared research showing that 50% of the bipartisan Infrastructure Act (IIJA) dollars from Dept of Transport are being used for highway projects. The American addiction to highway spending is real.
Know someone who should be aware what’s happening in this space?
🏭 Corporates & Later Stage
🏠 Apple’s next device may be your home control central. It would be surprising if this didn’t eventually offer home EV charging management by voice control.
🔋 The CEO of CATL, the world’s biggest battery maker, publicly claimed Tesla CEO Elon Musk doesn’t understand how to make batteries. Tesla’s bet on a new battery form factor is looking doubtful, just as its CEO prepares to focus on a new role in the Trump administration.
⚓️ The Zero Emissions Maritime Buyers Alliance, whose members include Amazon and IKEA, has announced a joint RFP for near-zero emissions maritime shipping fuels. Get your bids in…
🎬 Six automakers pledged to end the sale of internal combustion engine cars by 2040. The presence of BYD on the list underscores its rise to global prominence; the company Tesla in sales and now has Ford in its sights.
📦 Kia and DHL Korea are partnering on a custom-designed delivery van. The move underscores Kia’s ambitions in commercial vehicles as well as a desire to move beyond pure hardware.
🗂️ Stellantis has signed a binding agreement for synthetic graphite with Novonix. Chinese export restrictions on graphite are expected to continue.
🐣 Startups & Early Stage
🚛 Revoy (formerly SixWheel, Startup Watch Vol 28) is deploying its first long-haul trucking routes with Ryder. A good illustration of how even long-haul trucking might be battery-supported instead of hydrogen-powered.
🚤 Temo (Startup Watch Vol 21), the French maker of electric outboard marine motors, has opened a US subsidiary in Maine.
🛜 Yank (Startup Watch Vol 62) secured a contract with the US Dept of Defense for wireless battery charging. Moving electrons wireless will fundamentally reshape the world of “batteries in transportation equipment.”
✈️ Electric airplane startup Beta Technologies just completed its first test flight of a plane built on its new production line. You love to see it.
😰 Struggling EV maker Canoo allegedly let Walmart test its vehicles without airbags. The company trades at a market cap of $60M after raising ten times that amount.
🤔 Marc Lore’s startup Wonder purchased Grubhub from Just Eat for a fraction of its value a few years ago. It’s a bit of a head-scratcher for how this helps Wonder…
Fun fact: Newsletter subscribers live in 49 US states. Is this the week that North Dakota joins the party?
🐤DEEP DIVE: NORTHVOLT IS THE CANARY IN THE COAL MINE FOR EUROPE AND NORTH AMERICA
It was long expected, but that didn’t make the news less shocking. Earlier this week, the battery darling Northvolt fired its CEO and filed for Chapter 11 bankruptcy in the US.
It’s worth diving deeper into this one as a cautionary tale for both Europe and North America, who are walking an incredibly difficult tightrope: decarbonizing their economies at the same time as they try to decouple economically from China, particularly its industrial prowess in cleantech. For more context on this challenge, see the Deep Dive in Vol 41: The Next Cold War Is Already Here.
Northvolt’s story goes back about a decade, when 2 Tesla employees in Europe had the audacity to launch a homegrown European manufacturer of batteries for electric cars. Before the American VCs and policy-makers were fretting about the need for American battery capabilities, Northvolt had secured support from multiple Swedish heavyweights to back the idea of a homegrown battery champion.
The choice of Sweden for the first factory wasn’t accidental: The country is blessed with a deep history of automotive know-how (Volvo Cars, Volvo Trucks, and VW’s Scania unit), vast supplies of renewable energy, and proximity to the Nordic mining supply chain.
As momentum grew, Northvolt jumped from a primarily Swedish project to a pan-European one. BMW and VW invested in a funding round that would bring a second factory online in Germany. That subsequently included a purchasing agreement from BMW to buy over 2 billion euros worth of batteries down the line. Along the way, the company raised $13.8B and employed over 6,500 people, with over six factories across two continents all in various stages of preparing for mass production of batteries.
So where did it all go wrong? Northvolt’s flagship factory in Sweden assembled its first battery cell in December of 2021 and began shipping commercial products to car makers in 2022. But missed deadlines and quality controls issues were clear. In 2023, outlets like the Financial Times hinted that purchasing execs at automakers were becoming frustrated with Northvolt.
While Northvolt execs were busy choosing between the US and Canada for their sixth factory (Montreal, Quebec won the day), execs at BWM were growing increasingly worried about the meager volumes of batteries they were receiving from the first factory. Tension burst out into the open this past summer when BMW announced it was canceling its purchasing agreement, opting instead for batteries from Korea’s Samsung.
Getting just one factory through the production hell that almost killed Tesla is one thing, but trying to get your first factory through production hell without firm orders and sustaining the capital drain of getting other manufacturing sites up and running is impossible. The bad news has accelerated since, including potentially mysterious deaths of factory workers.
It’s hard to fault Northvolt for the plan to rapidly scale manufacturing. In a world where Chinese giants like CATL are growing manufacturing battery capacity at 40% per year, there’s no way to hope to compete without aiming for economies of scale.
This should be a wake-up call in Europe and North America. Ex-Tesla founders with billions in funding and blue chip customers in a market like EVs growing at double digits.
An investor friend of mine recently said “I’m not putting any more money in anything lithium-ion in North America. That’s just like solar a decade ago. China won. The only hope is to bet big on a next-generation battery chemistry like solid-state and try to survive against China at that game.”
Where Northvolt goes from here is anyone’s guess, but it’s hard not to see it as a warning sign about the difficulties in onshoring battery R&D, manufacturing, and company ownership on both sides of the Atlantic. Drop me a line and let me know your thoughts…
Know someone who should be aware what’s happening in this space?
I got a chance to visit the first charging station from Rove (Startup Watch Vol 58). Thanks to friend of the newsletter Jonah Bliss from Curbivore for the field trip.