Northvolt, a Swedish battery maker, files for Chapter 11 bankruptcy protection
Northvolt, a prominent Swedish battery manufacturer, has made the decision to file for Chapter 11 bankruptcy protection in the United States. This move comes as a significant setback for Europe’s efforts towards electrification. Despite being one of Europe’s most valuable privately held tech firms, Northvolt has opted for voluntary bankruptcy to restructure its debt, streamline its operations, and secure a stable foundation for its future endeavors. The company has assured that it will continue operating normally during the restructuring process, which is anticipated to be completed by the first quarter of next year.
“This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” stated Tom Johnstone, the interim chairman of Northvolt’s board. He emphasized that, despite immediate challenges, the restructuring will enable the company to meet the ongoing market demand for vehicle electrification. As part of the reorganization, Northvolt is set to receive approximately $245 million in new financing, comprising $145 million in cash and $100 million in debtor-in-possession financing.
Northvolt Ett, the company’s flagship battery gigafactory located in Skellefteå, northern Sweden, will continue its operations throughout the restructuring process. The company believes that this reorganization will play a crucial role in achieving its long-term goal of establishing a Western industrial base for battery production.
Cost-cutting measures amid competitive pressures
As a key partner of major European automakers, Northvolt specializes in producing lithium-ion batteries for the burgeoning electric vehicle industry. However, the company has faced increasing competition, particularly from Chinese manufacturers. Northvolt, headquartered in Stockholm, has been seen as Europe’s potential leader in building a domestic EV battery powerhouse. Nonetheless, the company has encountered financial challenges and recently embarked on a significant cost-cutting initiative.
In September, Northvolt announced plans to reduce its global workforce by approximately 20% and its Swedish staff by 25%. These measures were part of a broader effort to enhance operational efficiency and navigate the competitive landscape in the electric vehicle sector.
