Volkswagen, a major Northvolt customer and shareholder, last month announced plans to shut three factories in Germany, the first closures in its home market in its history.
At the same time, Chinese carmakers have been undercutting their European rivals by flooding the market with cheaper EVs that run on Chinese batteries. This piled pressure on Northvolt, which had aimed to set itself apart from rivals by developing clean batteries with renewable hydropower.
Even though it was producing 60,000 batteries per week and had $50bn in future orders, some of Northvolt’s customers, such as BMW, reduced investments in the company as demand slowed. Government investors, meanwhile, withdrew billions in planned funding after Northvolt scaled back its plans for new factories.
The bankruptcy filing buys Northvolt time to salvage its business. Scania, a core customer owned by Volkswagen, has provided $100m in debt-in-possession financing, a kind of emergency loan, while it has also unlocked $145m in cash collateral.
“Northvolt’s liquidity picture has become dire,” Millar said in a court filing. It has debts of nearly $6bn and has already wound down or pulled the plug on several divisions. Investors such as Baillie Gifford, BMW and Goldman Sachs all face having their stakes wiped out by its bankruptcy.
Peter Carlsson, a former Tesla executive and the company’s founder and chief executive, quit the business on Friday.
“This is an unbelievably emotional day,” he told a press conference. “Ultimately, I must take responsibility for the fact that we have ended up in this situation. I accept that responsibility.
“In hindsight, we were over-ambitious.”