Northvolt runs out of power: Swedish battery giant files for bankruptcy in Sweden

Stockholm-based Northvolt, a lithium-ion battery manufacturer, announced that it has filed for bankruptcy in Sweden.

The announcement comes a couple of months after the Swedish company sold its remaining shares in battery recycler Hydrovolt to Oslo’s aluminium and energy company Hydro, for NOK 78M (nearly €6.66M). 

Financial struggles and challenges

Northvolt, like many companies in the battery sector, has faced several significant challenges recently that have eroded its financial stability.

These challenges include rising costs, geopolitical issues, supply chain disruptions, and changes in market demand.

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 that were unforeseen.

Northvolt also downsized its operations and ceased funding for most of its joint ventures and non-core businesses.

Despite trying various methods to restructure financially, including filing for Chapter 11 in the United States and obtaining support from lenders, Northvolt could not secure the necessary funding to continue operating as it is.

As a result, the Board decided that filing for bankruptcy was the only solution while they looked for ways to obtain financing during the Swedish bankruptcy process.

Tom Johnstone, Interim Chairman of Northvolt’s Board of Directors, comments, “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 upward 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.”

Interest from potential partners

During this period, the Swedish company attracted interest from potential partners and investors, demonstrating its value and future potential.

However, due to limited time and resources, the company could not finalise the agreements needed to ensure its future.

“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 per cent 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,” adds Johnstone.

After the bankruptcy filing, a trustee appointed by a Swedish court will oversee the process, including selling the business and settling debts.

The companies Northvolt AB, Northvolt Ett AB, Northvolt Labs AB, Northvolt Revolt AB, and Northvolt Systems AB have filed for bankruptcy.

However, Northvolt Germany and Northvolt North America are not filing in their respective areas. Decisions regarding these subsidiaries will be made by the appointed trustee in consultation with the group’s lenders.

Tom Johnstone concludes, “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.”