A Series C company announced bankruptcy.
The European Company of the Year is on the verge of bankruptcy.
Founded in 2016, German star company VoltStorage specializes in iron-based flow batteries. It previously completed a Series C financing and was once selected as one of the top ten European star companies of the year. However, the latest news is that due to its failure to raise a new round of funds, VoltStorage will gradually cease operations.
"This is a sad day, not because the technology failed," said John Alper, the Chief Technology Expert of VoltStorage, when announcing the company's closure on a social platform. With the hollowing out of the manufacturing industry, it has been difficult for the European battery industry to produce a highly competitive player.
Recall that last year, Northvolt, the European power battery super unicorn, collapsed, which was shocking. In sharp contrast, Chinese players are rising. For example, CATL has captured nearly half of the European market share, and its overseas expansion is in full swing.
Three students, 500 million yuan in financing
The beginning of the story is quite idealistic.
Early on, Jakob Bitner and his parents left Russia and moved to Germany. During this time, he noticed that Europe was dependent on imported energy and there was a shortage of green energy. Thus, he had a dream - "to provide 100% renewable energy around the clock."
At that time, Bitner was studying management and technology at the Technical University of Munich. So he decided to take a year off from school and conduct research and development in his parents' basement. He successfully developed the first prototype of a redox flow battery.
Soon, the project received support from the university's entrepreneurship and innovation center, Unternehmer TUM, a leading institution in Europe. In 2016, VoltStorage was founded in Munich. In addition to Bitner, the co-founders include Michael Peither, majoring in business engineering, and Felix Kiefl, majoring in electrical engineering.
At the beginning of its establishment, VoltStorage focused on redox flow battery technology. In 2018, the company launched the vanadium flow battery system "Voltstorage SMART" with an output power of 1.5 kilowatts and a capacity of 6.2 kilowatt-hours, targeting residential solar energy.
What makes such a battery special?
As is well known, energy storage technology can smooth out peak and valley electricity consumption and stabilize fluctuations, which is crucial for new energy applications. However, due to the sharp increase in demand, the price of "lithium" in battery raw materials began to rise rapidly. What VoltStorage is trying to achieve is to replace lithium-based storage while ensuring durability, economy, and reliability.
On the other hand, the stack and electrolyte of a flow battery can be separated, allowing for flexible configuration and easier expansion. It is one of the most suitable technologies for long-term energy storage - long-term energy storage refers to technologies with an energy storage duration of more than 4 hours, which is more conducive to reducing the curtailment rate of wind and solar power. In contrast, it is difficult for lithium batteries to achieve low-cost expansion, and they are not very "good at storing" energy.
"We are the first company to automate the production process of redox flow batteries," the company's official website states. Compared with other lithium battery energy storage systems, the production of each Voltstorage SMART unit reduces CO2 emissions by approximately 37%.
However, after the pandemic, the prices of global commodities generally increased. The cost of vanadium ore, whose production is originally concentrated in a few countries, soared. VoltStorage then sought transformation. Starting in 2021, the company shifted its focus to the research and development of all-iron flow batteries. Two years later, it launched a 50 kWh commercial vanadium redox flow battery (VDIUM C50) with an annual degradation rate of less than 0.3%.
Catching the wave of new energy, investors soon came knocking.
Earlier, VoltStorage received seed-round financing of several million euros. In 2020, it received another 6 million euros in investment, jointly led by Korys, Bavarian Capital, and EIT InnoEnergy, with the participation of SOSV, Energie 360°, Matthias Willenbacher, and other angel investors.
The most remarkable event was in 2022 when the company completed a Series C financing of 24 million euros (approximately 200 million yuan), led by the American company Cummins Inc., with follow-on investments from existing shareholders such as Korys, EIT InnoEnergy, Bayern Kapital, SOSV, Energie 360°, and Enterprise Angels.
Subsequently, with the support of the EU institution InnovFin, VoltStorage borrowed 30 million euros from the European Investment Bank. So far, this energy storage startup has raised a total of 66 million euros (approximately 550 million yuan) and has more than 60 employees.
"The cost per kilowatt-hour is only about one-tenth of that of traditional lithium-ion batteries," VoltStorage said confidently when introducing its iron salt technology. In their plan, the first batch of iron salt batteries will be installed in a pilot project in early 2027. Everything seemed to be going smoothly.
Why did it collapse?
Reality is often harsher.
"This is a sad day, marking the end of the dream of bringing iron salt batteries to the market," wrote John Alper, the Chief Technology Expert of Voltstorage, on LinkedIn.
The direct cause was the breakage of the capital chain. Since 2022, it has been difficult for Voltstorage to raise funds, but the team remained optimistic because they had received project letters of intent worth over 1 billion euros. However, by the end of August, this funding had not materialized. In July this year, the local court initiated a self-administered bankruptcy procedure due to "excessive debt."
The founders also left one after another. Kiefl left the company as early as 2022. In September 2024, Jakob Bitner stepped down as CEO, and Volker Schulte took over. Peither also left the company in recent months.
"The reasons are complex - market adversity, investment cycles, and strategic decisions have all had an impact," Alper summarized when talking about the reasons for the company's closure. He believes that the team has pushed the technology to the limit, but still faced many difficulties.
This is not an isolated case.
Across the ocean, ESS Tech, a pioneer in all-iron flow batteries and a listed company on the New York Stock Exchange, is also facing a shortage of funds.
Founded in 2011, the three founders of ESS Tech developed the first prototype in a garage. After that, investors flocked to the company. Well-known investors such as SoftBank, Breakthrough Energy Ventures under Bill Gates, and BASF made multiple rounds of investments, with a cumulative financing amount of hundreds of millions of dollars. The highlight was in 2021 - on the day it went public on the New York Stock Exchange, its intraday market value reached 2.43 billion dollars, and its stock price once reached a record high of 281.25 dollars.
However, the good times did not last long. Due to its failure to obtain orders for a long time, ESS Tech actually delivered only 0.9 GWh last year, with a cumulative loss of up to 800 million dollars. The market voted with its feet, and the stock price dropped to less than 1.4 dollars. Its latest market value is less than 20 million dollars.
In May this year, ESS Tech warned that due to a shortage of funds, it planned to close its factory in Wilsonville. Although the company recently announced that it had received a 31 million - dollar investment mainly from board members and the management team, this amount is just a drop in the bucket considering the cash gap.
Why did the iron salt batteries, once highly anticipated by the market, end up being short - lived?
First and foremost is the economic aspect. Due to the different nature of the products, the initial installation cost of flow batteries is already higher. Coupled with the continuous decline in the price of lithium ore due to the impact of the cycle, the disadvantages of flow batteries become more obvious. In cost - sensitive markets such as the energy market, if the economic account doesn't add up, there will naturally be limited buyers.
Another problem is that the energy infrastructure in many parts of Europe and the United States is old and in urgent need of renovation - According to data from the International Energy Agency (IEA), due to the lack of available grid connections, at least 1500 gigawatts of renewable energy projects have been stopped or postponed. In Europe, about 40% of the distribution networks are more than 40 years old, and the upgrade is urgently needed but very difficult to achieve.
On one hand, there are more cost - effective competitors in the short term. On the other hand, there is congestion in the queue for grid connection. As a result, many startups have fallen before achieving commercialization.
Lessons Learned
"Unable to break China's dominance"
The road for Europe to build its local battery industry is full of thorns.
The most sensational event was the bankruptcy of Northvolt, the largest power battery company in Europe. Founded in 2016, Northvolt was known as the "European CATL." In less than 8 years, it raised 15 billion dollars in financing, making it the startup with the most financing since the establishment of the EU. Goldman Sachs, Volkswagen, and other companies had heavily invested in it.
Once regarded as "the hope of Europe," Northvolt once revealed that it planned to go public through an IPO in the past two years. When everyone was looking forward to the future, this super unicorn collapsed. Due to huge losses and its failure to obtain aid funds, Northvolt applied for bankruptcy protection in November last year. At that time, it only had 30 million dollars in cash on its books, which was only enough for about a week of operation. The speed of burning money was astonishing.
This also means that the real money of the investors behind it has gone down the drain. For example, Goldman Sachs suffered a loss of nearly 900 million dollars and had to write a letter to comfort its limited partners.
The collapse of Northvolt undoubtedly dealt a heavy blow to the European new energy industry. Bloomberg commented that Northvolt's bankruptcy means that Europe's attempt to break China's dominance in the electric vehicle field is failing. The report also pointed out that the plan for European electric vehicle battery factories worth 36 billion dollars is facing setbacks. 12 out of 16 planned factories have been postponed or cancelled.
This situation also exposes the structural dilemma of Europe's attempt to build a local battery supply chain: struggling with high energy and labor costs, still heavily relying on the Asian supply chain for key raw materials and components, and at the same time having to deal with the double squeeze of global price wars and technological iterations.
While European local battery companies are struggling, Chinese battery giants are making great progress here. Among them, CATL is particularly prominent. Zeng Yuqun, the chairman of CATL, personally led the company's overseas expansion and led the team to conduct frequent research on the European market. In the past five years, CATL started from scratch in Europe, successively built factories in Germany and Hungary, and currently occupies nearly half of the European battery market share. It is the largest battery supplier in Europe.
BYD has also sounded the horn in Europe. As an important player in the field of electric vehicle and battery development, BYD established its European headquarters in Budapest, Hungary, in May this year. Not long ago, Sunwoda, a Chinese battery giant, announced the establishment of its first self - owned production base in Europe, planning to invest about 1.9 billion yuan in Hungary to build the first - phase project of a new energy vehicle power battery factory. Previously, Eve Energy, with a market value of over 150 billion yuan, also announced that it would invest 9.97 billion yuan in Hungary.
"If (Europe and the United States) want to catch up with or even surpass China in the battery field, they may have to start with education," said Zeng Yuqun, the chairman of CATL, in a media interview, pointing out the key point. Compared with Europe and the United States, many universities in China are still engaged in electrochemical research, but relevant majors are not popular in Europe and the United States. This is the reason why China has a large number of talents in the battery industry.
From China to the world, the world is witnessing such a scene.
This article is from the WeChat public account "Investment World" (ID: pedaily2012), written by Yu Mengying and Zhou Jiali, and reprinted by 36Kr with authorization.