Sweden’s top EV battery maker Northvolt files for bankruptcy

Swedish battery maker Northvolt AV has filed for bankruptcy, done down by rising capital costs, geopolitical instability, supply chain disruptions, and shifts in market demand, marking one of the largest corporate failures in Sweden after the collapse of vehicle maker Saab.

Northvolt has been weighed down by an $8 billion debt that the company said it could not secure despite exploring all available means to seek a viable financial and operational alternative.

The board of directors of Northvolt AB on Wednesday announced the bankruptcy filing in Sweden after it failed to implement a financial restructuring, including a Chapter 11 restructuring process in the United States, despite liquidity support from lenders and key counterparties.

A Swedish court-appointed trustee will now oversee the process, including the sale of the business and its assets and settlement of outstandings, as per Swedish insolvency law. Northvolt has appointed Mikael Kubu as the interim trustee for the resolution process.

The bankruptcy filing was jointly done by Northvolt AB, Northvolt Ett AB, Northvolt Labs AB, Northvolt Revolt AB and Northvolt Systems AB – all related entities. 

Northvolt Germany and Northvolt North America have not filed for bankruptcy in their respective jurisdictions. The court-appointed trustee together with the lenders will decide on any inclusion of these subsidiaries in the bankruptcy process as the proceedings progress.

Nortvolt also said that the company has found significant interest in potential partners and investors during negotiations, but was left with little time and financial resources to conclude the necessary agreements.

Northvolt said it is in consultation with employees, suppliers, customers, and other stakeholders and is working closely with the authorities, trade unions, and partners to ensure support for employees during this transition.

Tom Johnstone, interim chairman of Northvolt, said the company has made difficult decisions to ramp up production and cut coasts, adding that it reduced operational cash outflow by 55 per cent, paused or delayed expansion plans, fast-tracked divestitures and delivered the first one million battery cells to a European customer. 

Moreover, these battery cells were produced using 100 per cent fossil-free energy, making it the most sustainable products so far produced anywhere in the world. 

Europe's auto sector was banking on Northvolt to reduce reliance on Chinese rivals such as battery maker CATL and EV and battery maker BYD.

Germany’s economy minister Robert Habeck said he hoped Northvolt might still find an investor to secure the future of its planned German plant while Canada's industry minister Francois-Philippe Champagne said his government was in talks to help find a buyer for Northvolt's plant in Quebec.