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Northvolt files for bankruptcy protection in blow to Europe’s EV ambitions Northvolt CEO resigns after EV battery maker files for bankruptcy protection
(about 3 hours later)
Swedish maker of battery cells for electric vehicles says it has enough cash to support operations for only a weekSwedish maker of battery cells for electric vehicles says it has enough cash to support operations for only a week
Northvolt, the Swedish maker of battery cells for electric vehicles, has filed for Chapter 11 bankruptcy protection in the US, dealing a blow to Europe’s hopes that its most developed battery player would reduce western carmakers’ reliance on Chinese rivals. The chief executive of Northvolt has resigned, after the Swedish battery startup filed for bankruptcy protection in the US.
Northvolt said it had enough cash to support operations for only about a week and it had secured $100m (£80m) in new financing for the bankruptcy process. It said operations would continue as normal during the bankruptcy. Peter Carlsson, who has led Northvolt since 2016, will step aside with immediate effect, the company said on Friday. Carlsson said Northvolt, which is widely seen as a leading player in European efforts to build an electric vehicles battery industry, needs to raise between $1bn (£800m) and $1.2bn in order to restore the business.
Northvolt has built a factory in northern Sweden where it hopes to use green energy to produce hundreds of thousands of EV batteries each year. It was the most prominent of a host of European startups hoping to challenge the dominant Asian battery industry.
However, the company has tipped into crisis in recent months as cash ran dry and it experienced problems getting its first factory up and running properly.
Northvolt on Thursday announced it would seek Chapter 11 bankruptcy protection in the US after talks over rescue investments failed. It said it had enough cash to support operations for only about a week and it had secured $100m (£80m) in new financing for the bankruptcy process. It said operations would continue as normal during the bankruptcy.
“Northvolt’s liquidity picture has become dire,” the company said in its Chapter 11 petition, filed in a bankruptcy court in Houston. Northvolt, which has operations in California, has about $30m in cash and about $5.8bn of debts.“Northvolt’s liquidity picture has become dire,” the company said in its Chapter 11 petition, filed in a bankruptcy court in Houston. Northvolt, which has operations in California, has about $30m in cash and about $5.8bn of debts.
The company, which employs about 6,600 staff across seven countries, expects to complete the restructuring by the first quarter of 2025.The company, which employs about 6,600 staff across seven countries, expects to complete the restructuring by the first quarter of 2025.
In September, Northvolt said it would cut 1,600 jobs in response to “headwinds” blowing through the electric car industry. In September, Northvolt said it would cut 1,600 jobs in response to “headwinds” blowing through the EV industry. It has also faced criticism for trying to build several factories at the same time, in Sweden, Germany and the US.
Within months, Northvolt transformed from Europe’s best shot at a homegrown EV battery champion to a company struggling to stay afloat by slimming down, hobbled by production problems, the loss of a big customer and a lack of funding. Within months, Northvolt has gone from a much-heralded startup to a company struggling to stay afloat by slimming down, and hobbled by production problems, the loss of BMW as an anchor customer and a lack of funding.
Europe has been hoping that Northvolt would reduce western carmakers’ reliance on Chinese rivals such as the battery maker CATL and the EV and battery maker BYD. Europe has been hoping that Northvolt would reduce western carmakers’ reliance on Asian rivals, who built their dominant position out of decades of experience in making batteries for consumer electronics. Industry leaders include China’s CATL and the EV and battery maker BYD, Japan’s Panasonic and South Korea’s LG.
Northvolt said the $100m was part of $245m in financing support for the bankruptcy. The Swedish truck maker Scania, a shareholder and its biggest customer, has said it will loan $100m to Northvolt to support the manufacturing of EV battery cells in Skellefteå, northern Sweden.Northvolt said the $100m was part of $245m in financing support for the bankruptcy. The Swedish truck maker Scania, a shareholder and its biggest customer, has said it will loan $100m to Northvolt to support the manufacturing of EV battery cells in Skellefteå, northern Sweden.
Tom Johnstone, the interim chair of Northvolt’s board, said: “This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production.” He also noted the support the company had received from lenders and customers. Carlsson, who will remain as a “senior adviser” and a member of the board, said the company had been “like a baby” to him, but that it had struggled to ramp up production.
As part of the restructuring, Northvolt would evaluate proposals for new money investment from strategic and financial investors, as well as existing lenders, shareholders and customers, he said. “In hindsight, we were overambitious on the timing in which we could achieve it,” he said.
The investment group Vargas, a co-founder of Northvolt and one of its largest shareholders, said the bankruptcy would allow the company to address financial challenges and maintain its competitive edge in producing high-performance battery cells.The investment group Vargas, a co-founder of Northvolt and one of its largest shareholders, said the bankruptcy would allow the company to address financial challenges and maintain its competitive edge in producing high-performance battery cells.
Northvolt has led a wave of European startups investing tens of billions of dollars in battery production to serve the continent’s automakers as they switch from internal-combustion engines to EVs.
But EV demand is growing at a slower pace than some in the industry had projected, and competition remains stiff from China, which controls 85% of global battery-cell production, according to International Energy Agency data.But EV demand is growing at a slower pace than some in the industry had projected, and competition remains stiff from China, which controls 85% of global battery-cell production, according to International Energy Agency data.
The Swedish deputy prime minister, Ebba Busch, said on X that the government continued to support the EV battery industry and it hoped the restructuring would help turn around Northvolt’s fortunes.The Swedish deputy prime minister, Ebba Busch, said on X that the government continued to support the EV battery industry and it hoped the restructuring would help turn around Northvolt’s fortunes.