Northvolt, which has two gigafactories in Sweden, is the hope of European battery production the road to collapse may have started in Junewhen BMW canceled a multi-billion dollar order. At that time few saw the significance of the movewhich practically started the countdown: it could have led to bankruptcy six months later.
For a long time, Northvolt tried to keep up even in the midst of the deepening crisis of the German car industry, while its orders kept decreasing. Northvolt’s bankruptcy protection announcement announced on November 21 represents one of the most significant failures of the European battery industry in the face of cheaper and faster Chinese and South Korean competition.
The next day Peter Carlssonthe co-founder CEO of Northvolt, warned that the European Union is significantly behind in green projects. The failed company leader also said that the company may need up to 1.2 billion dollars to finance its new business plans. The company is therefore now facing reorganization and is trying to redefine itself.
Northvolt’s top investors included:
- aBMW;
- the Volkswagen Group;
- the asset management division of Goldman Sachs;
- Denmark’s largest pension fund, ATP;
- and Baillie Gifford & Co. its foundations;
- and several Swedish organizations.
A representative of one of the funds, who spoke on condition of anonymity, called it shocking how quickly Northvolt coughed up its billions. As early as August, it was known that something had changed and that the battery manufacturer could run out of resources by September. They tried to mask the extent of the delays and the extent to which the cash register was empty with Excel tables and slides.
In other words, it has now become apparent how badly Northvolt and its financiers misjudged the situation a year ago. However, there was still a chance for Northvolt to continue the development of new battery factories to be established in Germany, Sweden and Canada. At the end of June, the Volkswagen Group, which owns 23 percent of the company, was ready to intervene.
Peter Carlsson
But by the end of the summer, Volkswagen itself faced a major crisis after European electric car sales stagnated and the profitable Chinese business declined, as a result of which Volkswagen called for unprecedented factory closures in Germany, with the dismissal of tens of thousands of employees. In August, the German automotive giant finally withdrew from Northvolt’s capital investment plans.
In the most recent funding round, Volkswagen essentially told us that they could no longer capitalize on us
Peter Carlsson said on November 22. Incidentally, Northvolt’s debts include a $330 million loan to Volkswagen, which is due in December 2025, according to the bankruptcy court filing.
The connection with Volkswagen will not be broken
To reassure investors, Northvolt scrapped a planned expansion of its main plant in Skelleftea in northern Sweden and replaced the factory manager in October. In this regard, Peter Carlsson admitted that he acted too slowly. “I probably should have pulled the brakes on some expansion tracks earlier,” said the company’s outgoing CEO.
Governments – from Stockholm to Berlin – have rejected the option of spending taxpayers’ money to save Northvolt. German Economy Minister Robert Habeck, who suggested in June that Northvolt build a second factory in his country, said over the weekend he was “cautiously optimistic” about the company’s future.
The relationship of the European battery manufacturing company with Volkswagen will not be broken in the future. Bus and truck manufacturer Scania remains one of the company’s most important customers, providing $100 million in debt financing at 16 percent interest. Meanwhile, battery factories under construction in Germany and Canada were left out of the bankruptcy proceedings, although the company said those projects would be postponed.
Source: www.economx.hu
