Northvolt, the Swedish EV battery startup, filed for bankruptcy in Sweden on Wednesday. The firm filed for insolvency after thoroughly exploring all available options to secure a viable financial and operational future.
In November, Northvolt encountered a financial crisis and sought Chapter 11 bankruptcy protection in the U.S. to secure additional funding and restructure its operations. Though the move gave brief financial support, the company couldn’t stabilize its balance sheet.
“Like many companies in the battery sector, Northvolt has experienced a series of compounding challenges in recent months that eroded its financial position, including rising capital costs, geopolitical instability, subsequent supply chain disruptions, and shifts in market demand,” Northvolt AB, the parent company, said in a statement.
A Swedish court-appointed trustee will manage Northvolt’s bankruptcy process, overseeing the sale of the company’s business and assets and the settlement of its debts.
Northvolt acknowledged facing major internal challenges as it ramped up battery production. The company had been criticized for attempting to build multiple factories simultaneously in Sweden, Germany, and the US. Northvolt initiated cost-cutting and job cuts for restructuring to save the business last year.
Northvolt stated that it will work with authorities and trade unions to support its 5,000 employees. Established in 2016, the firm represented Europe’s effort to create its own EV technology. Once considered crucial to Europe’s green transition, the company had secured around $15 billion (€13.8 billion) from governments and investors.
Due to weakened EV demand resulted from changes in state subsidies, investors reduced their funding. Furthermore, the Swedish government also declined major subsidies to Northvolt last year.
Northvolt’s Sweden factory aimed to use green energy to produce hundreds of thousands of EV batteries annually. However, the company faced challenges in getting the facility operational. Last year, it suspended the expansion of the plant, which was Europe’s first homegrown battery gigafactory.
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