In a significant blow to technology investors, Scottish Mortgage Investment Trust has suffered an apparent £315 million loss following the collapse of Swedish car battery manufacturer Northvolt. The devastating development emerged as Northvolt’s chief executive, Peter Carlsson, stepped down amid the company’s bankruptcy filing in the United States.
The FTSE 100-listed Scottish Mortgage, widely favoured by retail investors, had steadily built its position in Northvolt through multiple equity injections between 2020 and 2022. The investment trust’s stake, initially valued at £440.5 million and ranking as its seventh-largest holding by March 2023, was drastically reduced to £52.8 million in October 2024.
The dire situation at Northvolt became apparent when the company revealed it had merely $30 million in cash reserves against a staggering $5.8 billion in debt. The collapse has sent shockwaves through the investment community, with other notable investors including BlackRock, Goldman Sachs, and Volkswagen, which held a substantial 21 per cent stake.
Despite this setback, Scottish Mortgage’s portfolio resilience has been bolstered by successful investments in unlisted companies, particularly its £624.9 million holding in Elon Musk’s SpaceX. The trust, currently valued at £11.8 billion, maintains a strong position in successful American technology investments, including Amazon, Tesla, and Nvidia.
Industry experts point to mismanagement, excessive spending, poor safety standards, and an overreliance on Chinese machinery as key factors in Northvolt’s downfall. The company’s founder, Carlsson, who previously worked as a Tesla executive, had successfully raised approximately $15 billion from institutional investors and governments before the collapse.
The bankruptcy filing is positioned as a reorganisation opportunity, with Carlsson, who will remain on the board, indicating that Northvolt requires between $1 billion and $1.2 billion to continue as a going concern. The ultimate impact on Scottish Mortgage’s investment will become clearer once the full terms of the administration are established.
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