Northvolt the Swedish electric vehicle battery startup that was previously celebrated as Europe’s strongest opponent to Asian battery manufacturers declared bankruptcy in Sweden. The bankruptcy filing represents a major disappointment for European battery industry development.
Northvolt announced that it failed to establish essential financial terms required to operate as a Swedish entity. A court-appointed trustee will take control of company assets and debt settlement operations after bankruptcy filing. The bankruptcy situation threatens the ongoing employment of all 5,000 staff members.
The Swedish bankruptcy emerges after an extended period of financial crisis. The company filed for Chapter 11 bankruptcy protection in the US during November when its CEO Peter Carlsson left the organization. Carlsson informed that Northvolt required between $1 billion and $1.2 billion to maintain operational stability.
Since its establishment in 2016 Northvolt obtained $10 billion worth of equity, debt and public funding yet failed to resolve its financial problems. Both Volkswagen and Goldman Sachs made significant investments in the company.
The company Northvolt had planned to build a sustainable battery production facility in northern Sweden by utilizing green energy resources. But it encountered problems with production scale-up which led to the suspension of plant expansion last year.
The company declared bankruptcy because of multiple interconnected issues which accumulated beyond its ability to manage. It’s difficulties stemmed from increasing capital expenses along with geopolitical uncertainties and disrupted supply chains as well as changing market requirements.
Northvolt also admitted to facing major internal issues when their battery production facilities started their expansion phase. The company received criticism because it pursued factory development across Sweden, Germany and the United States at the same time. The bankruptcy of Northvolt demonstrates how difficult it is to establish a competitive battery industry.
Reference- Northvolt Newsroom, The Guardian, Electrek, Inside EVs, BBC