Northvolt reportedly was in debt to the tune of more than $8 billion (RM 35.4 billion) as of end-January.
Swedish battery cell manufacturer Northvolt has recently declared bankruptcy on Wednesday. This collapse represents one of Sweden’s largest corporate failures since Saab collapsed more than a decade ago, and effectively ends Europe’s strongest contender against dominant Asian battery producers.
A court-appointed trustee will oversee the bankruptcy proceedings, managing asset sales and settling outstanding obligations where possible. Notably, Northvolt’s operations in North America, Germany, and Poland are not included in the Swedish bankruptcy filing, with their fate to be determined by the trustee in consultation with lenders.
Northvolt had previously sought Chapter 11 bankruptcy protection in the United States last November, as its financial resources dwindled. Despite these efforts to secure funding to address ongoing production issues at its flagship facility in northern Sweden, the company ultimately failed to stabilise its operations.
“The company was unable to secure the necessary financial conditions to continue in its current form,” Northvolt stated in its announcement. The battery maker’s debt had ballooned to over $8 billion (RM 35.4 billion) across nine entities involved in the Chapter 11 process, according to available documentation.
The bankruptcy directly affects more than 5,000 employees, including approximately 1,800 members of the IF Metall union. Union leader Marie Nilsson expressed frustration over the situation: “When the acute phase of the work is done, there will be many questions about what transpired that will demand answers. It’s obvious that a lot has gone wrong, and the price is now being paid by our members.”
Since its founding in 2016, Northvolt had secured more than $10 billion (RM 44.3 billion) in equity, debt, and public financing. Major stakeholders included Volkswagen with a 21% stake, as well as Goldman Sachs holding 19%.
Northvolt previously was seen as Europe’s most promising effort to reduce dependence on Chinese battery manufacturers like CATL and BYD. The collapse highlights broader challenges facing Europe’s EV battery production plans, which have struggled with regulatory hurdles, manufacturing difficulties, and slower-than-expected EV adoption rates.
Warning signs regarding Northvolt’s imminent failure had nevertheless been mounting for some time. BMW cancelled a $2 billion (RM 8.9 billion) order in June 2023 after the company failed to fulfil a long-term supply contract signed in 2020. Earlier last year meanwhile, a planned $5 billion (RM 22.15 billion) green loan deal intended to fund plant expansion was cancelled as problems intensified.
Former CEO Peter Carlsson, who stepped down shortly after the November Chapter 11 filing, had indicated the company needed up to $1.2 billion (RM 5.3 billion) to restore operations. Recent months saw several investors writing down their stakes to zero, while long-time partner Scania and Volvo had already begun securing alternative battery cell suppliers.
