The bankruptcy of battery cell manufacturer Northvolt has become a symbolic end to the dream of a government-driven green transformation economy. A confidential audit by Germany’s Federal Court of Auditors now reveals the full scale of political failure under former economy minister Robert Habeck.
Politics is the art of the possible. Yet every generation of policymakers must relearn the lesson that the real economy places strict limits on what can be achieved by decree or intervention. This truth now confronts the outgoing “traffic light” coalition government, particularly Habeck’s Green-led Ministry for Economic Affairs.
Driven by a climate agenda, Habeck’s ministry embraced a doctrine of subsidizing sectoral “lighthouse projects” -- intended to serve as shining examples for the rest of the industry. These were to be financed with taxpayer money and demonstrate the viability of a green industrial transition. In theory, these projects would catalyze a new economic order based on carbon neutrality. In practice, they followed a pattern well known among central planners: voodoo economics.
Such publicly funded prestige ventures rarely survive in open markets. At best, they crowd out efficient competitors due to their privileged access to government guarantees. At worst, they destabilize value chains and destroy capital. Either way, they distort the system more than they transform it.
Northvolt: A Showcase Gone Wrong
Northvolt was one such flagship project. And because we live in an EU governed by green utopianism, only ecologically correct projects -- particularly in energy, transportation, or retrofitting -- receive state largesse. Once heralded as Europe’s battery cell champion, Northvolt filed for bankruptcy in Sweden on March 12 after a failed restructuring attempt in the U.S. The key reasons: rising capital costs and weak demand for electric vehicles.
Production at the Swedish factory in Skellefteå will be wound down by the end of June. No buyer emerged. Some 2,800 employees lost their jobs. They had been promised stable green careers and a higher purpose in the fight against climate change. They became collateral damage in a political fantasy -- one now exposed by the auditors' report.
Habeck’s Politics of Hope
Page seven of the report states: “Despite critical warnings and an evidently limited information base, the lead Ministry for Economic Affairs and Energy did not pursue the open questions and risks. Instead, it largely acted on the ‘principle of hope.’”
The auditors criticize Habeck’s failure to assess the risks to public funds (though the word “taxpayer” is conspicuously absent). Even an external study commissioned from PwC failed to present an accurate picture of the risks involved. The Court of Auditors also notes violations of proper documentation practices and the absence of a multi-person oversight principle in the loan approval process.
Hope, sloppy credit oversight, and absent documentation -- it all fits the profile of Robert Habeck, the green political gambler. This episode reveals a broader cultural decline in Germany’s political elite, once marked by its frugal stewardship of public funds. Habeck represents the antithesis of the responsible statesman. The Northvolt debacle unveils his paternalistic vision of the state, along with the now-infamous Green habit of infantilizing complex social and economic realities.
One need only think of Berlin’s mismanaged immigration policy, which fails to address the labor shortage while fueling a cascade of new societal problems. But nuance and realism rarely feature in the green script.
Billions Go Up in Smoke
The Northvolt case followed the same logic. The decision to fund it, the auditors say, was not based on sound market data or sober risk analysis. It was based on wishful thinking. Realistic assessments gave way to ideological enthusiasm for the green transition. We all know the saying: Hope is not a strategy.
The financial damage is stark. Over one billion euros in subsidies and loans -- 700 million from Germany alone -- have vanished. Once again, a media-hyped project, meant to showcase political competence, has crumbled in the face of economic reality. The political silence surrounding the Northvolt collapse is telling. Few dare question the systemic failure of state-led industrial policy, let alone criticize the EU’s sacred Green Deal, supposedly ushering in a new age of clean energy and effortless prosperity.
Of course, no one in Habeck’s ministry could have anticipated that households, facing economic uncertainty, would become more cautious with spending -- or that the EV market might prove volatile. Risk aversion, budget constraints, and income uncertainty -- such words sound to the Berlin technocrats like defeatist poetry from a parallel universe.
Yet a rigorous analysis of Northvolt’s market environment would have shown the company’s position was already shaky at launch.
The High of Feasibility Politics
The auditors again: “A simulation of the default risk for the convertible bond systematically underestimated the risk to the federal government. The peer group used for comparison consisted mostly of far more mature companies, already established in competitive markets. Furthermore, no scenario analysis was conducted to assess deviations in key planning assumptions -- despite such procedures being common in similar cases.” (BRH, p. 8).
In other words: the numbers were massaged, worst-case scenarios ignored -- classic “Habeckonomics,” on steroids. Lost in their transformation ecstasy, ministry officials decoupled entirely from the real economy, consumed by delusions of feasibility and a grotesque overestimation of their own political power.
Page eight continues: “The Ministry also received indications from other sources that there were delays and cost overruns at the Swedish plant. It should not have considered the position paper as a sufficient basis for decision-making. It failed to follow up on clear information gaps and risks. There is no indication that the ministry questioned the core assumptions of the company’s success.”
A Culture Without Accountability
Habeck not only trampled on basic economic prudence; he also elevated himself above reality. Hope replaced reason. The Northvolt scandal is now his personal failure -- and a case study in a very different kind of transformation.
What we are witnessing is an accelerating concentration of executive power, a self-appointed elite claiming sweeping interventionist rights. And we see how the media, often state-funded, now serves as the bodyguard for these interventionist crusaders, shielding them from scrutiny.
State failure is rebranded as moral virtue, while dissent is slandered as sabotage of “the grand vision.” But the Northvolt collapse is no accident. It is a symptom of a system so high on its own narratives that it can no longer face the facts of economic stagnation.
Those who still believe in a return to reason, to market logic, and to meritocracy seem out of step with the times. Yet without a renaissance of personal accountability and free-market discipline, the green command economy will become the bankruptcy estate of the republic.
Image: Northvolt