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.

It's about who controls the battery supply chain, and thus one of the most crucial energy technologies of tomorrow. As is the case in the U.S., Europe is trying to break free of China's iron grip on the battery space.

Northvolt transformed in a matter of months from Europe's best shot at a homegrown electric-vehicle battery champion to a struggling company.