Silicon Valley Nordic Beat: Weekly News & Insights
October 4, 2014
Editor’s Column:
Is Northvolt Repeating Tesla's Early Mistakes?
Northvolt, co-founded by Peter Carlsson—Tesla's former supply chain head in Palo Alto—is now facing financial setbacks and stalled expansion plans that, in many ways, echo Tesla's early difficulties. Like Northvolt, Tesla was heavily subsidized from the outset, receiving significant support from the California government. But there are some differences.
One significant difference is how the two companies have handled their problems publicly.
Tesla, in its early days, was very open about its struggles. Elon Musk didn't shy away from admitting the company's production issues, delays, and financial troubles, even going so far as to call it "production hell." This transparency, though risky, helped build Tesla's story as a company that could overcome the odds. Musk's candid approach kept investors and the public informed and engaged, even in tough times.
Northvolt, however, has been more closed. While reports of delayed expansions and rising costs have surfaced, Northvolt's leadership has been less vocal about the specifics of their challenges. This more cautious communication style contrasts with Musk's openness and has left investors and media yearning for a more transparent approach from Northvolt.
Timing is another key difference. Tesla had to push electric vehicles into a market that was not fully ready for them, and its survival depended on convincing people of the technology's future. Northvolt, by contrast, is entering a market where demand for batteries is already booming, driven by electric vehicles and renewable energy storage. Governments, especially in Europe, are eager to support local battery production, giving Northvolt a significant advantage in terms of support and market opportunity.
Despite this favorable environment, Northvolt's financial troubles resemble Tesla's early struggles. The company's ambitious plans have been slowed by cost overruns and operational difficulties, much like Tesla's battles to scale production in its early days. While the demand for batteries is clear, Northvolt's challenge lies in executing its plans efficiently and at scale while managing costs in a highly competitive market.
Both companies have enjoyed substantial government subsidies, but Tesla's openness about its challenges was a way to meet the critics, because, oh yes, there were critics. Northvolt, on the other hand, has been more cautious and closed - more “lets fake it until we make it”.
Now, Northvolt is reportedly fighting to avoid bankruptcy, and its subsidiary Cuberg in San Francisco—once a shining hope for the crucial electrification of the aviation industry—has been shut down.
Tesla's story shows that transparency is essential, even in tough times. That Elon Musk later on started keeping things behind closed doors is another story.
Let me know your thoughts!
Margaretha Levander
