Next Round In The Northvolt Drama: EU Subsidy Trap And A New Californian Rescue

Submitted by Thomas Kolbe

After Northvolt’s spectacular collapse, a Californian start-up is now poised to buy the Swedish battery manufacturer. Brussels is already dangling new subsidies. No lessons appear to have been learned.

Lyten is the new ace up the sleeve of the Brussels eco-central planners. The California-based battery manufacturer, founded in 2015, is supposed to clean up the mess left behind by former Economy Minister Robert Habeck in perfect coordination with the EU Commission and the state of Schleswig-Holstein after Northvolt’s failure.

Just before Habeck left his ministerial post for Denmark (he will, of course, continue to hold his Bundestag seat), taxpayers were presented with the bill for the green subsidy debacle: roughly €900 million, of which the federal government covers €600 million of the loss via the KfW (Kreditanstalt für Wiederaufbau), while Schleswig-Holstein had issued a €300 million guarantee.

In the end, Northvolt collapsed under €5.8 billion in debt—an unsurprising result when subsidy-dependent companies operate completely detached from market demand.

Enter Lyten
Now, the California company Lyten is supposed to fix it. Investors include, among others, Stellantis, the parent company of Opel, and the logistics firm FedEx. The U.S. government is also listed with an investment of about $4 million. The Californians plan to acquire all remaining Northvolt sites, including the main factory in Skellefteå (Sweden), the expansion plant, the research center in Västerås, and the “Northvolt Three” project in Heide, Schleswig-Holstein.

The acquisition still requires approval from the relevant regulatory authorities in Sweden, Germany, and at the EU level. The deal is expected to close in Q4 2025. Lyten plans to resume operations at the acquired sites quickly and expand them gradually.

Lyten CEO Dan Cook stated that the company aims to supply the North American and European battery markets with cleanly produced energy storage systems, thereby contributing to energy and supply security.

These are ambitious goals—especially as green subsidy companies are failing across Europe at an alarming pace. One must therefore ask whether the Americans realize at what stage the EU’s green transformation currently stands. Even before Northvolt’s collapse, numerous similar subsidy projects had failed, including Britishvolt, AMTE Power (also in the UK), and Freyr in Norway. These cases show that there is neither a market for this technology in Europe nor any way to artificially create one with subsidies.

Cook cannot have missed the fact that the EU has thoroughly trapped itself with its Green Deal and is running a subsidy “perpetuum mobile,” passing the costs squarely onto taxpayers.

A Sinister Suspicion
Moreover, Lyten plans to produce lithium-sulfur batteries—a technology Northvolt never had.

When these facts are combined, a dark suspicion emerges: Are the Americans merely trying to gain access to Northvolt’s intellectual property cheaply? Is this yet another case of subsidy hunters, aware worldwide that European money flows freely as long as a project shows even the slightest green sheen?

Indeed, as Der Spiegel reports, Cook has already approached the European Union requesting additional subsidies. He told the paper that there is no doubt the EU wants battery production on the continent. There are several programs Lyten could access through this deal, he added.

Clearly, Cook referred to the EU’s seemingly endless subsidy resources, which reportedly include another €700 million for Northvolt under the “Temporary Crisis and Transition Framework” (TCTF)—officially aimed at promoting climate neutrality, but in practice mainly funneling taxpayer money into risky transformation projects. A German Northvolt subsidiary had already received a legally binding grant, which could be transferred to a new Northvolt owner.

Germany’s Doors Are Wide Open
The Federal Ministry for Economic Affairs confirmed to Spiegel that while there is no automatic transfer, it is indeed possible “under certain conditions.” That’s the kind of German bureaucratic prose that gives any potential buyer the impression they’re not just getting machines, halls, and personnel—but a sack of taxpayer money on top. One only has to ask nicely; evaluation hardly matters, as PricewaterhouseCoopers (PwC) had warned.

In June 2023, auditors explicitly cautioned against federal involvement in Northvolt, pointing to the lack of market potential.

At Northvolt’s Stockholm headquarters, staff are more cautious. The new owner does not want Sweden’s help for the time being, said Cook to Dagens Industri.

What he meant exactly is unclear—was it the migration chaos in Scandinavia, the economic downturn, or Northvolt’s collapse specifically? Ultimately, it hardly matters. Germany, in Cook’s eyes, has apparently not suffered enough yet; here, one can ask for taxpayer money without scruples. In the best Germany of all time, anyone can hope for subsidies or other forms of state support, as long as they ask politely.

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About the author: Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.