Stockholm (NordSIP) – In the latest development in the saga of Northvolt, the company has announced it has declared bankruptcy in Sweden. The announcement affects Northvolt AB, Northvolt Ett AB, Northvolt Labs AB, Northvolt Revolt AB and Northvolt Systems AB.
“This is an incredibly difficult day for everyone at Northvolt. We set out to build something groundbreaking — to drive real change in the battery, EV and wider European industry and accelerate the transition to a green and sustainable future,” Tom Johnstone, Interim Chairman of Northvolt’s Board of Directors, commented on this occasion.
A Difficult Industry
Discussing the Board of Director’s reasons for this decision, the company noted that the “battery sector (…) has experienced a series of compounding challenges in recent months that eroded its financial position, including rising capital costs, geopolitical instability, subsequent supply chain disruptions, and shifts in market demand,” the press release said.
However, not all of the challenges faced by Northvolt were shared with the rest of the industry. “Further to this backdrop, the company has faced significant internal challenges in its ramp-up of production, both in ways that were expected by engagement in what is a highly complex industry, and others which were unforeseen,” Northvolt added in the press release.
The announcement underscore that Northvolt had made attempts to remain afloat, but was unable to. “Despite pursuing all available options to negotiate and implement a financial restructuring, including a Chapter 11 restructuring process in the United States, and despite liquidity support from our lenders and key counterparties, the company was unable to secure the necessary financial conditions to continue in its current form. The Board therefore determined that this is the only available solution while the company pursues all realistic options to obtain financing to continue operating during the Swedish bankruptcy process,” Northvolt’s press release continued.
A Regretable Outcome
This latest development in the Northvolt saga was received with a heavy heart by investors, not just for the financial implications but for what it means for the battery sector and the transition for net-zero emissions in Europe.
“The outcome is especially hard considering not only the level of engagement and interest we held with potential partners and investors in recent months, but also the clear improvement and upwards trajectory that we have been seeing in Northvolt’s production in Skellefteå, where cell output from serial production lines has doubled and we have secured a 50% improvement in production yield since September,” Johnstone added.
4 to 1 Investments, the umbrella investment company created by Swedish public pension funds AP1, AP2, AP3 and AP4 to channel SEK5.8 billion in investments into Northvolt, was one of the investors that expressed its disappointment at this outcome.
“4 to 1 Investments has been a shareholder in Northvolt since 2021. In the transition to a lower fossil fuel dependency and a Europe that wants to secure local production from European suppliers, we have seen European battery manufacturing and Northvolt as a long-term investment. In November, Northvolt initiated a restructuring under American law, so-called Chapter 11, to carry out a restructuring of the company’s capital structure in parallel with the continued operation of the business. The company has made significant progress in scaling up production and has strong support from strategic customers. It is therefore regrettable that the company has unfortunately not managed to secure sufficient capital to create stability over time and that the company’s board of directors has today been forced to file for bankruptcy in Sweden,” says Jenny Askfelt Ruud, Chairman of the Board of 4 to 1 Investments (translated from Swedish).
“It has been a challenging time for the company and we obviously wish that the development had been different. We continue to follow the development and have a dialogue with various stakeholders. In the longer term, this is a loss for the Swedish economy and Skellefteå in particular for Northvolt and of course all employees. This is something we deeply regret, says Jenny Askfelt Ruud, Chairman of the Board of 4 to 1 Investments,” Ruud adds.
At the start of February, NordSIP reported that the AP funds had already written down their investment in Northvolt.
Hopeful for the Future
In the process of these diligences, Northvolt believes it was able to find evidence of interest in and of capacity for Northvolt to succeed, but it was unfortunately unable to bridge that gap on time to avoid bankruptcy.
“It should be underscored that in engaging in this process, the company found significant traction with potential partners and interest from investors — something which illustrates the strong underlying value and future potential of Northvolt and is testament to its accomplishments. Ultimately, however, with limited time and financial resources available, the company was unable to conclude the necessary agreements to secure its future,” a Northvolt press release argued.
“Through the recent months, Northvolt has refocused its operations and reached several achievements. We ramped up production to meet customers’ needs, reduced operational cash outflow by 55%, made tough decisions to pause or delay expansion plans, completed divestitures and ultimately delivered our first one million battery cells to a European customer. These battery cells are produced with 100% fossil-free energy and represent the most sustainable products of their type in the world. They are based on technology developed in Sweden and invented at Northvolt Labs, the most sophisticated battery R&D facility outside of Asia,” Northvolt elaborated in a press release.
The Bankruptcy Process
Following the filing, a Swedish court-appointed trustee will now oversee the process, including the sale of the business and its assets and settlement of outstanding obligations. The process will be conducted in accordance with Swedish insolvency law, with a focus on ensuring an orderly transition for employees, partners, and creditors. Northvolt has nominated Mikael Kubu as Trustee.
As the bankruptcy process unfolds, the court-appointed trustee will determine the future of Northvolt’s businesses and their assets, including technology and production facilities. Further updates will be provided by the trustee as the process progresses. For any inquiries regarding the process, stakeholders are encouraged to contact the trustee’s office once appointed.
Northvolt Germany and Northvolt North America are not filing for bankruptcy in their respective jurisdictions. As wholly owned subsidiaries of Northvolt AB, any decisions regarding these entities will be made by the court-appointed trustee of Northvolt AB in consultation with the Group’s lenders at the appropriate time.
Northvolt recognizes the significant impact of this outcome on its employees, suppliers, customers, and other stakeholders. The company is working closely with relevant authorities, trade unions, and partners to ensure that employees receive the support and information they need during this transition.
Grateful for the (ongoing) Journey
“Northvolt has come a long way, and we are beginning to see the real outcomes of our work, including production line improvements that helped customers bring more electric vehicles to the market more quickly. For me personally, it remains key for Europe to have a homegrown battery industry, but it is a marathon to build such an industry. It needs patience and long-term commitment from all stakeholders.”
“The passion, dedication, and innovation of our team has been nothing short of extraordinary, and we deeply regret that there is not a different path forward. I want to extend my strongest gratitude to our employees, customers, suppliers, investors, and partners who believed in Northvolt’s mission. I also want to extend the same gratitude for all the support we received from the communities in Skellefteå and Västerås.”
Tom Johnstone concluded: “We are hopeful that the foundation we built — the technology, the expertise, and the commitment to sustainability — will continue to drive change in the industry.”
