Photo: Northvolt
Northvolt was Europeans' best hope of having their own EV battery gigafactory, but it failed due to production problems and lack of funding. The Swedish company filed for US Chapter 11 bankruptcy protection and needs over $1 billion in new funding to stay afloat. Northvolt CEO and co-founder Peter Carlsson announced he is stepping down.
Northvolt problems became obvious earlier this year when the company announced the intention to sell off its stockpile of battery-making materials to finance its operations. This came one month after Northvolt announced cutting one-fifth of its workforce to reduce costs. Northvolt wanted to streamline its operation by halting the production of cathode-active materials (CAM) in Sweden. This made stocks of raw materials like nickel sulfate and lithium hydroxide redundant.
These efforts also failed because Northvolt announced on Thursday that it filed for Chapter 11 bankruptcy in the US. The company, which has operations in California, only had enough money to support operations for about a week. Northvolt has $5.8 billion in debts, and the loss of a $2 billion contract with BMW, one of its biggest customers, accelerated its downfall.
Northvolt is confident it can survive the bankruptcy and aims to complete the company's restructuring by the first quarter of 2025. However, its CEO and co-founder, Peter Carlsson, announced his resignation, assuming the role of senior adviser while remaining a board member. Analysts consulted by Reuters think the bankruptcy will give Northvolt some short-term breathing space, although it won't do miracles unless Northvolt finds investors and raises more capital.
Northvolt has been Europe's best hope of reducing its customers' reliance on Chinese batteries supplied by CATL and BYD. The startup attracted billions of dollars in investments from European carmakers, including Volkswagen, BMW, and Volvo. However, it burned money quickly after a string of management mistakes, with some even believing that its Chinese partners sabotaged it.
The Swedish battery maker bought expensive battery manufacturing equipment from China's state-affiliated Wuxi Lead. According to sources from Swedish media, this equipment could only be operated by Chinese technicians deployed at the factory. However, the machinery didn't work as planned, resulting in halted production and billions in losses for Northvolt.
Reports claim that these setbacks were not accidental, with some components in the machinery appearing to be remotely controllable. This raised suspicions of Chinese interference in the factory's operations. Local newspapers speculated that Chinese companies were waiting for the startup to collapse to buy its assets at a bargain price.
This would allow China to control a vital piece of the European battery supply chain and set foot in the European Union, something they couldn't do before. The move would blow Europe's dream of achieving energy independence. In light of the announced bankruptcy, this scenario becomes more likely. Seeing who will hurry to save Northvolt from disintegration would be interesting.
These efforts also failed because Northvolt announced on Thursday that it filed for Chapter 11 bankruptcy in the US. The company, which has operations in California, only had enough money to support operations for about a week. Northvolt has $5.8 billion in debts, and the loss of a $2 billion contract with BMW, one of its biggest customers, accelerated its downfall.
Northvolt is confident it can survive the bankruptcy and aims to complete the company's restructuring by the first quarter of 2025. However, its CEO and co-founder, Peter Carlsson, announced his resignation, assuming the role of senior adviser while remaining a board member. Analysts consulted by Reuters think the bankruptcy will give Northvolt some short-term breathing space, although it won't do miracles unless Northvolt finds investors and raises more capital.
Northvolt has been Europe's best hope of reducing its customers' reliance on Chinese batteries supplied by CATL and BYD. The startup attracted billions of dollars in investments from European carmakers, including Volkswagen, BMW, and Volvo. However, it burned money quickly after a string of management mistakes, with some even believing that its Chinese partners sabotaged it.
The Swedish battery maker bought expensive battery manufacturing equipment from China's state-affiliated Wuxi Lead. According to sources from Swedish media, this equipment could only be operated by Chinese technicians deployed at the factory. However, the machinery didn't work as planned, resulting in halted production and billions in losses for Northvolt.
Reports claim that these setbacks were not accidental, with some components in the machinery appearing to be remotely controllable. This raised suspicions of Chinese interference in the factory's operations. Local newspapers speculated that Chinese companies were waiting for the startup to collapse to buy its assets at a bargain price.
This would allow China to control a vital piece of the European battery supply chain and set foot in the European Union, something they couldn't do before. The move would blow Europe's dream of achieving energy independence. In light of the announced bankruptcy, this scenario becomes more likely. Seeing who will hurry to save Northvolt from disintegration would be interesting.
Google News