Northvolt files for bankruptcy in Sweden

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Battery maker Northvolt has filed for bankruptcy in Sweden, capping the downfall of a company once regarded as Europe’s best hope of competing in an industry dominated by China.

The Swedish start-up, which has backers including Volkswagen, Goldman Sachs and BlackRock, said on Wednesday that it had been unable to secure financing to continue and that a court-appointed trustee would sell its assets.

“This is an incredibly difficult day for everyone at Northvolt. We set out to build something groundbreaking — to drive real change in the battery, EV and wider European industry and accelerate the transition to a green and sustainable future,” said Tom Johnstone, Northvolt’s interim chair.

It is an ignominious end for a company that attracted some $15bn of corporate and government investment to develop technology for electric vehicles where Europe is playing catch-up to Asian countries such as China, Japan and South Korea.

Northvolt filed for Chapter 11 bankruptcy in the US in November but had spent recent months in talks with about 100 potential investors about putting in $1bn to secure the future of its sole existing battery factory in Skellefteå, just below the Arctic Circle.

A Financial Times investigation previously found that the group — led by two former Tesla managers — had tried to open as many as six factories at the same time. Ten current and former employees said there were problems with poor management, safety standards, and an over-reliance on Chinese machinery.

After it was founded in 2016, Northvolt quickly became Europe’s best-funded start-up, winning attention from top government officials in Germany, Canada, Sweden and Brussels.

But the Swedish government, unlike those in Canada and Germany, declined to offer major subsidies to the group and last year, investors backed out of a financing round at the last minute. Its planned Canadian and German factories are not part of the bankruptcy.

Johnstone said that despite increased production at its factory in recent months and cost cuts it had been unable to secure financing. “We are hopeful that the outreach we have undertaken with potential investors during the Chapter 11 process will accelerate identifying the necessary financing to allow continued trading under the Swedish bankruptcy process,” he added.

Swedish truckmaker Scania, Northvolt’s main customer, provided the company with fresh capital in November and bought its industrial battery systems business. It has said it recently secured supplies from other battery makers.

Chinese battery makers already have a strong presence in Europe. CATL, the world’s largest manufacturer, is building plants in Germany, Hungary and Spain, the latter a joint venture with carmaker Stellantis. VW has partnered with another Chinese company Gotion.

There are other European companies developing EV batteries but they are at an earlier stage than Northvolt. There have also been other failures, including Norwegian group Freyr which abandoned its battery plans to become a solar power company instead.