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Swedish EV battery maker Northvolt has filed for Chapter 11 bankruptcy protection in the US, delivering a major setback to Europe’s efforts to reduce reliance on Chinese battery manufacturers.
Key Developments
- Northvolt reported it has just US$30 million in cash, enough to operate for about a week, and US$5.8 billion in debts.
- It has secured US$100 million in new financing for the bankruptcy process as part of a US$245 million package.
- Operations will continue during restructuring, which is expected to conclude by Q1 2025.
Why It Matters
Northvolt, seen as Europe’s best hope for a homegrown EV battery industry, has faced mounting challenges, including production issues, loss of a major customer, and funding shortages. The crisis underscores the stiff competition from China, which controls 85% of global battery-cell production (International Energy Agency).
Stakeholder Impact
- Volkswagen (21% shareholder): Monitoring the situation closely but has declined to comment on potential business impacts.
- Scania: Provided a US$100 million loan to support Northvolt’s manufacturing plant in Skellefteå, Sweden.
- Vargas (co-founder): Believes the bankruptcy process will help Northvolt address financial hurdles and maintain its competitive edge.
Industry Challenges
- Slower-than-expected growth in EV demand has strained Northvolt and other European start-ups investing billions in battery production.
- Competition from China’s CATL and BYD remains intense.
Government Stance
Swedish Deputy Prime Minister Ebba Busch reiterated the government’s support for the EV battery industry but ruled out taking a stake in Northvolt.
What’s Next?
Northvolt will explore new investments from strategic and financial partners, shareholders, and lenders. It aims to restructure and stabilize its operations to regain its footing in the fiercely competitive global market.
This bankruptcy marks a critical turning point in Europe’s EV journey, testing the region’s ability to establish a sustainable and independent battery ecosystem.
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