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

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.

Swedish battery maker Northvolt filed for Chapter 11 bankruptcy protection in the U.S., delivering a blow to Europe's electrification ambitions.