The major electric vehicle (EV) battery cell manufacturer Northvolt has filed for bankruptcy in Sweden.
Northvolt on March 12 said that following an “exhaustive effort to explore all available means to secure a viable financial and operational future for the company,” it had filed for bankruptcy in Sweden.
The company was seen as a major player in Europe’s net-zero electrification plans.
Documents show that the company had a debt of more than $8 billion as of the end of January. The bankruptcy is one of the biggest in Swedish corporate history.
The company, founded by former Tesla executives, has secured more than $13 billion in equity and debt since it was founded in 2016.
Northvolt aimed to become a “sustainable model for battery manufacturing,” hoping its battery cell gigafactory in Skelleftea in northern Sweden would reduce Western carmakers’ reliance on Chinese rivals.
The company said it had received $55 billion in orders from key customers, including BMW, Fluence, Scania, Volvo Cars, and Volkswagen Group.
In its bankruptcy statement, however, Northvolt said it 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.”
EU’s Net-Zero Plans
The bankruptcy is a blow to the EU’s net-zero plans.The company filed for Chapter 11 bankruptcy protection in the United States in November last year.
Billions in State Aid
Last year, the European Commission approved Germany to provide 902 million euros (about $983 million) in state aid to allow Northvolt to build a gigafactory in the town of Heide, Schleswig-Holstein.At the time, the commission approved the aid to prevent investment from being diverted from Europe, as Northvolt might have established the plant in the United States.
In the same year, the European Investment Bank (EIB) said it was financing Northvolt’s battery factory with more than $1 billion as part of a $5 billion debt financing raised to expand “Europe’s first homegrown gigafactory.”
The Epoch Times asked EIB how much total cash Northvolt has received to date, but the bank did not respond by publication time.
German Economy Minister Robert Habeck said on Wednesday that he was hopeful that new investors would be found for a Northvolt factory.
“The talks are ongoing,” he said. “The possibility definitely exists.”
Porsche, which had supply contracts with Northvolt, said it had begun searching for alternatives.
“I remain convinced that we need competent battery developers in Europe,” Porsche and Volkswagen CEO Oliver Blume said at a press conference.
‘Terrible Mistake’
Reacting to the news of Northvolt’s bankruptcy, researcher Ben Pile, who runs the campaign group Climate Debate UK, told The Epoch Times by email, “Green policymakers refuse to listen to any criticism of their policies, despite deindustrialisation and the failure to foster domestic green industries being a very obvious consequence of their ambitions as long as 20 years ago.”Pile told The Epoch Times that European policymakers have long promised that “strong climate legislation will create the incentive for domestic manufacturing in the green sector.”
“But in Britain and Europe, green tech manufacturers, who are still dependent on countries like China for their supply chains, have been unable to compete with manufacturers in the East, where there are no such laws, and where materials production and manufacturing benefit from lower energy prices thanks to much cheaper energy, among other lower costs,” he said.
“Nothing can persuade them that they have made a terrible mistake,” he added.
A European Commission spokeswoman told The Epoch Times by email that the commission was aware of Northvolt’s announcement.
“It is not up to the commission to comment on decisions taken by private companies on commercial grounds,” she said.
She added that the commission “fully stands by [its] ambitions for the European battery industry” and “remain[s] committed to supporting the battery sector, which is at the core of [its] decarbonisation objective.”
