Swedish electric battery battery maker Northvolt has filed for bankruptcy in Sweden after it was unable to find money to pay its taxes.
It faced a tax bill of almost €20 million (219 million Swedish krona) to pay by March 12 and the company’s board risked becoming personally liable for payment.
To avoid that, Northvolt chose to file a bankruptcy application for all its Swedish companies with the Stockholm District Court instead.
Northvolt’s bankruptcy was one of the biggest in Swedish corporate history and the most high-profile in more than a decade, since Saab went bust in 2011.
Around 5,000 employees have been left at risk of losing their jobs.
A court-appointed liquidator will now try to sell all or parts of the company, while Northvolt will continue to try secure capital so it can keep battery production going.
Its operations in North America, Poland and Germany were not filing for bankruptcy in their jurisdictions and any decision regarding those units would be made by the trustees in consultation with lenders, the company said.
The construction site in Heide in northern Germany was not affected by the restructuring proceedings because the German subsidiary is financed independently of the parent company.
“This is an extremely difficult day for everyone at Northvolt,” Tom Johnstone, acting chairman of the board, said in a press release on March 12
The company said it had experienced a series of compounding challenges in recent months that eroded its financial position. Those included rising capital costs, geopolitical instability, subsequent supply chain disruptions and shifts in market demand.
It further admitted it has faced internal challenges in its attempted ramp-up of production, both in ways that were expected and others that were unforeseen.
Northvolt claimed it found “significant traction with potential partners and interest from investors”, but was “unable to conclude the necessary agreements to secure its future”.
Johnstone stressed it has boosted production to meet customers’ needs while reducing operational cash outflow by 55 per cent and had delivered its first one millionth battery cell to a European consumer.
“These battery cells are produced with 100 per cent fossil-free energy and represent the most sustainable products of their type in the world,” he said.
“They are based on technology developed in Sweden and invented at Northvolt Labs, the most sophisticated battery R&D facility outside of Asia.”
Rather than being an independent green innovator, Northvolt uses old Chinese technology, with 20-year-old equipment that was already out of date when put in place. https://t.co/oCI3Guhuj5
— Brussels Signal (@brusselssignal) October 9, 2024
Critics noted that it might have been better for Northvolt to have filed for bankruptcy in Sweden directly and pay subcontractors instead of spending millions on lawyers in the US.
The company said, though, that was not an option and that its decision provided a basis for restructuring the balance sheet.
Deputy Prime Minister of Sweden and Minister for Energy, Business and Industry Ebba Busch wrote on X on March 12 that it was “tough news” adding: “The government has worked actively for seven months to support Northvolt.”
On the same day on X, Jimmie Åkesson of the right-wing Sweden Democrats, said: “The bankruptcy of Northvolt is a tragedy on many levels and I sympathise with all the suppliers and employees who have been put in a difficult situation. Some should learn a lesson. No one mentioned, no one forgotten.”
Since its inception, Northvolt was touted as the European champion for electric-car battery manufacturing, despite the fact that it relied on older Chinese technology.
It raked in a lot of subsidies and funding from pension funds, together with investments from car manufacturers, which had been pushed towards environmentalists’ goals by Brussels.
Its growth model soon appeared unsustainable, though, and some major orders were withdrawn leading to a financial crunch and associated problems.
Christian Sandström, senior associate professor in digital business at the Jönköping International Business School, had previously told Brussels Signal: “The model of Northvolt, which appears to be the model of many Green Deal projects, exists in essence of using debt to finance start-ups that will make substantial losses to begin with.
“Governments have created a fertile soil for ‘green’ bubbles. When imposing new regulations and offering large amounts of Other People’s Money, the EU has created an environment where no risk is too big as someone else is taking care of the bill.”
Northvolt’s debt across its nine entities involved in the US Chapter 11 process was reported to be more than $8 billion (€7.35 billion).
At the start of 2024, the European Investment Bank injected nearly €1 billion into Northvolt’s gigafactory in northern Sweden.
As the flagship of the European Commission’s “green” battery initiative, Northvolt had received the lion’s share of attention and funding.
In late November, an EIB spokesperson confirmed to Brussels Signal that €313 million remained outstanding, guaranteed under the European Fund for Strategic Investments (EFSI).
Swedish pension fund AMF is a top-10 shareholder and over the past decade has invested around 1.95 billion krona, or €169 million, into the company.
Four other State-owned funds under the Swedish National Pension Funds Act held 3.7 per cent of the shares after investing millions of euros. Folksam, a prominent Swedish mutual insurance company, put almost €80 million into Northvolt.
Volkswagen, then holding a 21 per cent stake as Northvolt’s largest shareholder, significantly reduced the value of its investment in the company in 2024.
US lender Goldman Sachs reportedly wrote off its €853 million shareholding at the end of 2024.
