Northvolt’s ambition was to challenge the dominance of Asian battery makers, such as CATL and BYD in China. The company launched in 2016 with the idea of tapping cheap renewable energy to build lithium-ion batteries for electric vehicles (EVs). It promised 90% less CO 2 emissions compared to cells made using coal power by 2030.

Northvolt's financial collapse deals a blow to Europe's plan to set up its own battery industry to power electric cars, stirring a debate about whether it needs to do more to attract investment as startups struggle to catch up with Chinese rivals.

Beleaguered Swedish battery manufacturer Northvolt announced on Thursday that it was filing for bankruptcy in the U.S., striking a blow to Europe’s ambitions for homegrown lithium-ion batteries.