Northvolt, the Swedish battery maker once hailed as a cornerstone of Europe’s electric vehicle (EV) battery production, filed for Chapter 11 bankruptcy protection in the United States on Thursday, marking a significant setback for the continent's green transition.
The move prompted the resignation of co-founder and CEO Peter Carlsson on Friday.
Carlsson will remain on the board as a senior advisor. Pia Aaltonen-Forsell, the company’s Chief Financial Officer, will step in as interim CEO.
Who is Northvolt?
Founded in 2016 by two former Tesla executives, including Carlsson, Northvolt aimed to establish Europe as a competitive player in a global battery market dominated by Chinese and US manufacturers.
Known for its pioneering lithium-ion, lithium-metal, and sodium-ion battery cells, Northvolt supplied major automakers, including Volkswagen and BMW, and was instrumental in Europe’s strategy to reduce reliance on Asian imports.
Its flagship factory, Northvolt Ett in northern Sweden, was a symbol of the region's commitment to green energy.
What happened?
Northvolt’s financial troubles stemmed from a combination of ambitious expansion plans, slowing EV demand, and operational challenges. The company struggled to scale production effectively, leading to consistent failure to meet production targets. This shortfall resulted in the loss of a US$2.1bn supply contract with BMW in June.
Simultaneously, Northvolt's overambitious efforts to build multiple gigafactories—including the now-cancelled Northvolt Fem in Sweden—exacerbated its cash crunch. The company reported an operating loss of US$1.03bn in 2022, against modest revenue of US$128m. By November 2024, it had only US$30m in cash reserves while carrying US$5.8bn in debt.
Efforts to secure additional funding, including government grants and private investments, fell short. Production delays and underperformance added to the challenges, as did reduced EV demand in Europe, reflecting broader market volatility.
Implications for Europe’s green transition
With its motto “Make oil history”, Northvolt was not just a business but a beacon of Europe’s green ambitions.
Northvolt's bankruptcy represents a blow to Europe’s aspirations to build a robust domestic battery industry. China controls 85% of global battery-cell production.
The Swedish government and key stakeholders, including Volkswagen and Scania, have expressed hope that Northvolt can recover. Interim Chairman Tom Johnstone said, “This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production.”
What’s next?
Filing for Chapter 11 will allow Northvolt to restructure its debt, access US$245m in new financing, and resize its operations to better match current market conditions.
Northvolt will continue operating while undergoing restructuring, with its Swedish and international subsidiaries unaffected by the bankruptcy filing. The process, expected to conclude in early 2025, aims to establish a more financially sustainable operation.
However, the company still needs to secure between US$1bn and US$1.2bn in additional funding to stabilise.
