Northvolt files for bankruptcy: 'An incredibly difficult day'

Battery manufacturer Northvolt has lost its long fight for survival.

After wrestling with financial challenges for some time, the board on Wednesday filed for bankruptcy in Sweden.

Despite intensive efforts, the company failed to secure the funding needed to continue operations.

“This is an incredibly difficult day for everyone at Northvolt," says Tom Johnstone, Interim Chairman of Northvolt’s Board of Directors. "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."

According to Northvolt, several factors contributed to its financial crisis. Rising capital costs, geopolitical instability and supply chain disruptions have eroded the company's financial position. On top of this came internal challenges in scaling up production.

Despite interest from potential partners and investors, the company failed to reach the agreements needed to secure its future. Northvolt previously applied for a so-called Chapter 11 process in the United States, which is a form of reconstruction, but the company still couldn't salvage the situation.

Positive signs came too late

Ironically, the bankruptcy comes just as the company began seeing improvements in production. Johnstone highlights that cell production from series manufacturing lines has doubled and that they've achieved a 50-percent improvement in yield since September.

“Through the recent months, Northvolt has refocussed its operations and reached several achievements," Johnstone says. "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."

On Wednesday morning, reports first emerged in Swedish newspaper DN that Northvolt was preparing to file for bankruptcy application. The Swedish government has also been kept informed about the situation.

German and North American operations not included

The bankruptcy threat applies to the entire Swedish operation, but Northvolt's German and North American operations are not included.

The battery giant has faced a series of crises over the past year with problems including inadequate production, financial losses and serious accidents. In September last year, the company announced 1,600 redundancies and several senior executives have left, including CEO Peter Carlsson who stepped down at the turn of the year.

According to DN's sources, the debts in the parent company amount to 58 billion kronor while assets are valued at only 23.5 billion kronor. At the turn of the year, equity was minus 34.3 billion kronor.

Northvolt has nominated Mikael Kubu as bankruptcy administrator. It is now up to the bankruptcy administrator to determine the future of Northvolt's operations and their assets, including technology and production facilities.