Swedish EV battery maker Northvolt, once hailed as Europe’s hope to rival Chinese battery dominance, has filed for Chapter 11 bankruptcy protection in the U.S. The news deals a significant blow to Europe’s ambitions to build a homegrown EV battery industry and reduce reliance on Asian manufacturers like CATL and BYD.
Dire Financial Conditions
Northvolt’s financial struggles have been mounting for months. The company reported having just $30 million in cash against a massive $5.8 billion in debt. After attempts to secure rescue investments failed, the company turned to Chapter 11 protection. As part of its restructuring process, Northvolt secured $100 million in financing, but this is only a fraction of the $1 billion to $1.2 billion needed to stabilize operations. The company expects to emerge from bankruptcy by Q1 2025.
Despite its critical cash situation, Northvolt plans to continue operations during the restructuring process, though it acknowledges that liquidity remains extremely tight, with funds only sufficient for one week of operations without additional support.
CEO Steps Down Amid Crisis
Adding to the turmoil, Peter Carlsson, who has served as Northvolt’s CEO since 2016, resigned following the bankruptcy filing. Carlsson, who described the company as “like a baby” to him, admitted that Northvolt had been overly ambitious in its timelines for scaling production. While stepping down as CEO, Carlsson will remain a senior adviser and board member to assist with the company’s recovery.
Northvolt’s ambitious plans to establish factories in Sweden, Germany, and the U.S. have been hampered by production issues and funding shortages. Key clients like BMW and Lithium Corp. pulled out due to delays and instability, exacerbating the company’s financial woes. Earlier this year, Northvolt cut 1,600 jobs, signaling trouble in meeting its goals.
The bankruptcy highlights the intense competition within the global EV battery market, where Chinese firms control 85% of global production, according to the International Energy Agency. Northvolt was seen as a critical player in Europe’s bid to secure its EV supply chain. Deputy Prime Minister Ebba Busch expressed hope that Northvolt’s restructuring will stabilize its operations, although the Swedish government has declined to take a stake in the company.
Path to Recovery from Bankruptcy
Despite the setbacks, Northvolt secured $245 million in total financing to support the bankruptcy process, with Scania, its largest customer, contributing $100 million to sustain production at the company’s factory in Skellefteå, Sweden.
However, with slowing EV demand and fierce competition from Asian manufacturers, Northvolt’s future remains uncertain. Its downfall underscores the significant challenges European startups face in building a competitive EV battery industry amidst global economic pressures.
