Swedish battery manufacturer Northvolt has filed for Chapter 11 bankruptcy protection in the United States, marking a significant setback for European ambitions to challenge Asian dominance in the electric vehicle battery sector.
The company, which had secured more than £15 billion in investments from prominent backers including Volkswagen, Goldman Sachs, and BlackRock, has encountered substantial difficulties scaling up production at its flagship facility in Skellefteå, northern Sweden.
Northvolt’s financial situation has become particularly dire, with cash reserves dwindling to just £30 million – barely enough to sustain operations for a week. The company’s debt burden stands at £5.8 billion, highlighting the severity of its financial predicament.
The restructuring process, expected to conclude in the first quarter of 2025, will see Northvolt receive £145 million in accessible cash and £100 million in fresh financing from Swedish truck manufacturer Scania. The company’s German and Canadian operations, which are independently financed with nearly £4 billion in government subsidies, will continue their normal operations.
Internal sources have pointed to various factors contributing to the company’s struggles, including allegations of mismanagement, excessive spending, questionable safety standards, and an overdependence on Chinese machinery. The factory’s production levels have been notably disappointing, achieving less than 1% of its intended 16-gigawatt-hour annual capacity.
The company’s troubles have been compounded by a fatal explosion at the factory last year, leading to pending gross manslaughter charges, and the loss of a £2 billion contract with BMW. Despite recent attempts to secure a £300 million rescue package, the deal’s collapse has forced Northvolt to seek bankruptcy protection as a last resort.
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