The Northvolt electric battery manufacturer, unable to gather the necessary funds for survival, declared bankruptcy in Sweden on Wednesday, a failure for the European battery industry that depends on Asia. Northvolt, who was placed in November under the protection of the United States Banking Law to try to find new investors, therefore, failed in its survival operation. The Swedish group still used about 5,000 employees.
“Throughout these last four months, since we have entered the restructuring procedure under Chapter 11 (in the United States), we have led to considerable efforts to restructure the company financially, in particular when requesting a wide range of potential investors, with the aim of guaranteeing a stable future for the company,” Tom Johnstone, the interim president of the Board of Directors of Northvolt.
The company’s bankruptcy is one of the greatest in contemporary history of Sweden. “This decision represents the only realistic result,” he added, saying he had “heavy heart.” “We regret” that it is the end, he told employees.
“Geopolitical instability”
A director will now supervise the process, in particular the sale of its assets and the regulation of current obligations. Questioned by Mr. Public Radio, Mikael Kubu said he expected to be able to “maintain production” to find a buyer. In January, the shareholders had given the green light to the continuation of the activity and the search for new shareholders. The two main shareholders are German manufacturer Volkswagen, in financial difficulties, and the American Business Bank Goldman Sachs.
“Like many companies in the battery sector, Northvolt has faced in recent months with a series of cumulative challenges that have weakened their financial situation, including the increase in capital costs, geopolitical instability, disturbances in the supply chain and changes in market demand,” the company said.
The group had begun a severe restructuring in September, eliminating a quarter of its workforce and focusing its efforts in its main production site in northern Sweden, in Skellefteå. He had frozen his projects to establish giant production factories in Canada, Germany, but also his project in Göteborg (southwest Sweden) in association with Volvo. But in November, when it was put under chapter 11, it still leaned under a debt of $ 5.84 billion for only $ 30 million in available liquidity.
The Swedish state had noticed that it would not come to the group’s aid. On Wednesday, Prime Minister Ulf Krister said that “the State will play its role, in the best possible way.”
Throughout the procedure, the company has aroused a significant interest in the participation of possible partners and investors, insists on Northvolt. “During the past year, we worked very hard (…). We were close to the solutions several times, but unfortunately, we failed to go to the end,” said General Manager Peter Carlsson before journalists, admitting that “tears were paid” before making such a decision.
European hope
Founded in 2016, Northvolt was considered one of the main European hopes in terms of batteries when Europe seeks to catch up in front of Asian, Chinese giants (Catl, Byd) and Koreans (LG) in particular. “It remains essential for Europe to have a battery industry, but the construction of this industry is a marathon. It requires patience and long -term commitment of all interested parties,” said Tom Johnstone in the morning.
The group indicates that it had recently managed to provide its first millions of battery cells to a European client, not specified.
This bankruptcy could have a strong social impact in northern Sweden, where Northvolt had concentrated its activity. “Today’s announcement is very sad, and we know that it will have a negative impact on our municipality in the short term,” Kristina Sundin Jonsson, municipal director, in a press release, reacted. Europe represents only 3% of the global production of battery cells and headed 25% of the market in the late decade.
Northvolt’s example illustrates the challenges of competing with Asian producers, smaller manufacturers fighting their production and achieved sufficient yields, said the International Energy Agency (IEE) in a report on March 5.
Source: BFM TV
