Swedish battery maker Northvolt files for bankruptcy as cash runs out

STOCKHOLM (Reuters) –Northvolt, the battery cell maker for electric vehicles, said on Wednesday it had filed for bankruptcy in Sweden, one of the country’s largest, effectively ending Europe’s best hope of developing a rival to major Asian EV battery players.

The Swedish company sought U.S. Chapter 11 bankruptcy protection last November as its cash pile dwindled, in a bid to secure funds to fix persistent problems in boosting output at its flagship plant in northern Sweden.

“The company was unable to secure the necessary financial conditions to continue in its current form,” the group, which has over 5,000 employees, said in a statement.

Its debt stood at more than $8 billion across the nine Northvolt entities in the Chapter 11 process at the end of January, documents have shown.

The bankruptcy is one of the biggest in Swedish corporate history and the most high-profile one since that of now-defunct carmaker Saab Automobile more than a decade ago.

Europe’s auto sector had hoped Northvolt would reduce Western carmakers’ reliance on Chinese rivals such as battery maker CATL and EV and battery maker BYD.

“It’s obvious that a lot has gone wrong, and the price is now being paid by our members,” Marie Nilsson, leader of the IF Metall union, which has about 1,800 members affected by the bankruptcy, said in a statement.

US, GERMAN OPERATIONS

Northvolt‘s operations in North America and Germany were not filing for bankruptcy in their jurisdictions, the company said.

The company’s Polish entity was also not included in the bankruptcy filing, an internal document seen by Reuters showed.

The company has received more than $10 billion in equity, debt and public financing since its 2016 inception, and its biggest owners include Volkswagen with a 21% stake, and Goldman Sachs, with 19%.

Porsche, which had supply contracts with Northvolt, said it had begun searching for alternatives after it became clear the battery cell maker was headed for bankruptcy.

“I remain convinced that we need competent battery developers in Europe,” Porsche and Volkswagen CEO Oliver Blume told a press conference.

Several owners have in recent months written down their stakes to zero while long-time partner Scania said this week it had lined up a new supply of battery cells in addition to the truckmaker’s deal with Northvolt.

Northvolt early last year clinched a $5 billion green loan deal meant for a large plant expansion, but funding was later cancelled as its problems mounted.

German carmaker BMW cancelled a $2 billion order in June as the battery maker failed to deliver on a long-term supply contract for battery cells signed in 2020.

Former Northvolt CEO Peter Carlsson, who stepped down shortly after the Chapter 11 filing in November, had said the company needed up to $1.2 billion to restore its business.

Creditors include both private and public investors.

Jenny Askfelt Ruud, who chairs 4 to 1 Investments which has invested 5.8 billion Swedish crowns ($578 million) in Northvolt shares and convertibles, said the bankruptcy was regrettable.

“In the longer term, it’s a loss for Sweden’s industry and social economy, and above all for Skelleftea, Northvolt and its employees,” she said.

A court-appointed trustee will now oversee the bankruptcy process, which will include the sale of its assets and settling its outstanding obligations as far as possible.

($1 = 10.0405 Swedish crowns)

(Reporting by Marie Mannes; additional reporting by Johan Ahlander, Alessandro Parodi and Victoria Waldersee; writing by Niklas Pollard and Terje Solsvik; editing by Louise Rasmussen, Tomasz Janowski and Bernadette Baum)