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Released December 02, 2024 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Swedish electric vehicle (EV) battery maker Northvolt (Stockholm, Sweden) has filed for bankruptcy in the U.S. in an effort to access funds to help stabilize its main European manufacturing operation.
The company, which is Europe's only homegrown EV battery maker, said that filing for Chapter 11 reorganization in the U.S. would allow it to access approximately US$245 million in new financing. The company's co-founder and chief executive officer, Peter Carlsson, will also step down. The decision is another major blow to the troubled battery maker, which was seen as Europe's only real chance to reduce its almost complete reliance on batteries from Chinese and South Korean firms like Contemporary Amperex Technology Company Limited (CATL) (Ningde, China) and LG Energy Solution (Seoul, South Korea) among others. In its filing at a court in Houston, Texas, it read: "Northvolt's liquidity picture has become dire." The company stated that it has only enough cash to support its California-based operations for about a week. It stated that it had around US$30 million in cash and had US$5.8 billion in debts. The company employs around 6,600 staff across seven countries.
Northvolt said it will continue to make deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees. It added that the Chapter 11 restructuring process in the U.S. "is distinct from a bankruptcy or administration proceeding in Sweden or many other countries". The bankruptcy measure comes just over a month after the company announced that it was cutting 1,600 jobs--around 20% of its Swedish workforce--and halting expansion works at its main plant in Sweden. For additional information, see October 7, 2024, article - Northvolt Cuts 1,600 Jobs and Investment.
The company said the latest decision will let it access "new sources of funding", including approximately US$145 million in cash collateral and another US$100 million from "one of Northvolt's existing customers." Northvolt Ett, the company's flagship battery gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, Sweden, will remain operational as the company tries to ramp up production to meet commitments to its customers. Northvolt Germany and Northvolt North America, subsidiaries of Northvolt AB with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt's strategic positioning.
Northvolt Ett is the company's only fully operational gigafactory with a nameplate capacity of 16 gigawatt-hours (GWh), but in reality, it is only producing around 1 GWh annually so far. Industrial Info is tracking a project to expand the plant by adding 30 GWh of annual cell manufacturing capacity, but this has been suspended. In recent months, it placed its cathode active material facility in Borlange into care and maintenance due to production and quality issues. It will now buy those materials from Chinese or Korean suppliers. Industrial Info is tracking its two largest international gigafactory projects, Northvolt Six in Canada and Northvolt Drei in Heide, northern Germany.
Tom Johnstone, interim chairman of the board for Northvolt, commented: "This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production. Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification. We are likewise pleased by the strong support we have received from our existing lenders and our customers."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The company, which is Europe's only homegrown EV battery maker, said that filing for Chapter 11 reorganization in the U.S. would allow it to access approximately US$245 million in new financing. The company's co-founder and chief executive officer, Peter Carlsson, will also step down. The decision is another major blow to the troubled battery maker, which was seen as Europe's only real chance to reduce its almost complete reliance on batteries from Chinese and South Korean firms like Contemporary Amperex Technology Company Limited (CATL) (Ningde, China) and LG Energy Solution (Seoul, South Korea) among others. In its filing at a court in Houston, Texas, it read: "Northvolt's liquidity picture has become dire." The company stated that it has only enough cash to support its California-based operations for about a week. It stated that it had around US$30 million in cash and had US$5.8 billion in debts. The company employs around 6,600 staff across seven countries.
Northvolt said it will continue to make deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees. It added that the Chapter 11 restructuring process in the U.S. "is distinct from a bankruptcy or administration proceeding in Sweden or many other countries". The bankruptcy measure comes just over a month after the company announced that it was cutting 1,600 jobs--around 20% of its Swedish workforce--and halting expansion works at its main plant in Sweden. For additional information, see October 7, 2024, article - Northvolt Cuts 1,600 Jobs and Investment.
The company said the latest decision will let it access "new sources of funding", including approximately US$145 million in cash collateral and another US$100 million from "one of Northvolt's existing customers." Northvolt Ett, the company's flagship battery gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, Sweden, will remain operational as the company tries to ramp up production to meet commitments to its customers. Northvolt Germany and Northvolt North America, subsidiaries of Northvolt AB with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt's strategic positioning.
Northvolt Ett is the company's only fully operational gigafactory with a nameplate capacity of 16 gigawatt-hours (GWh), but in reality, it is only producing around 1 GWh annually so far. Industrial Info is tracking a project to expand the plant by adding 30 GWh of annual cell manufacturing capacity, but this has been suspended. In recent months, it placed its cathode active material facility in Borlange into care and maintenance due to production and quality issues. It will now buy those materials from Chinese or Korean suppliers. Industrial Info is tracking its two largest international gigafactory projects, Northvolt Six in Canada and Northvolt Drei in Heide, northern Germany.
Tom Johnstone, interim chairman of the board for Northvolt, commented: "This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production. Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification. We are likewise pleased by the strong support we have received from our existing lenders and our customers."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
