A European giant adrift
Created in 2016, Northvolt hoped to become a European leader in the production of electric batteries. After raising more than 13 billion euros from investors like Volkswagen, BMW and Volvo, the company inaugurated its first factory in Skellefteå in 2022. Except that there are production delays linked to technical failures and a strategy too costly expansion quickly jeopardized its finances. In 2023, its losses reached 12.8 billion Swedish crowns (i.e. 1.1 billion euros). Despite a massive loan of 4.3 billion euros obtained in early 2024, the company was unable to meet the required conditions, worsening a liquidity crisis.
A restructuring under American protection
Northvolt has therefore placed itself under the protection of Chapter 11 of the American bankruptcy law (it can do so, because it also has an activity, albeit modest, in the United States), a measure which should help it to restructure its debt and secure emergency funding of $245 million. In this context, the company hopes to continue its deliveries, honor its commitments to its suppliers, and stabilize its main activities, in particular the production of battery cells. Except that unfortunately, gigafactory projects in Germany and Canada are not included in this procedure. Management also announced the resignation of its CEO and co-founder Peter Carlsson, temporarily replaced by a duo of managers.
Northvolt's structural and financial challenges
Northvolt has been hit by an overall slowdown in demand for electric vehicles, as well as technical difficulties in ramping up production. On top of that, negotiations for a financial bailout, particularly with Volkswagen and Goldman Sachs, failed. Added to this are contested strategic decisions, such as the closure of a cathode factory and the elimination of 1,600 jobs in September 2024. The company's debt now stands at $5.8 billion, compared to just $30 million in available liquidity.
An impact on European ambition
The bankruptcy of Northvolt is a hard blow for Europe, which seeks to reduce its dependence on Asian batteries and catch up with players like CATL or LG. In 2024, the planned battery production capacity in Europe by 2030 has decreased by 176 gigawatt hours. This crisis clearly shows Europe's difficulties in attracting competitive investments in the face of Chinese giants.
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