Northvolt, the Swedish company specializing in battery cells for electric vehicles (EVs), has filed for Chapter 11 bankruptcy protection in the U.S., dealing a significant blow to Europe’s ambitions to reduce its reliance on Chinese rivals in the EV battery market.
The company stated on Thursday that it has only enough cash to maintain operations for about a week and has secured $100 million in new financing to navigate the bankruptcy process. “Northvolt’s liquidity picture has become dire,” the company explained in its Chapter 11 petition, which was filed in U.S. Bankruptcy Court in Houston. Despite this, Northvolt assured that operations would continue as usual during the bankruptcy proceedings.
The company, which operates in California and employs around 6,600 people across seven countries, reported a staggering $5.8 billion in debt, with only $30 million in cash reserves. Northvolt expects to complete its restructuring by the first quarter of 2025.
Northvolt’s rapid transformation from Europe’s most promising battery supplier to a struggling entity highlights significant challenges, including production issues, the loss of a major customer, and a lack of funding. Europe had hoped Northvolt would lessen Western automakers’ dependency on Chinese battery makers like CATL and BYD.
As part of its bankruptcy process, Northvolt secured $245 million in financing, including a $100 million loan from Swedish truck manufacturer Scania, its largest customer and a shareholder. “This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” said Tom Johnstone, interim chairman of Northvolt’s board.
Volkswagen, which holds a 21% stake in Northvolt, acknowledged the filing and stated it was in close contact with the company but declined to comment on potential impacts to its own operations.
