Northvolt files for banktrupcy protection

Swedish battery startup Northvolt has filed for Chapter 11 bankruptcy protection in the US as its finances collapse.

Northvolt AB and certain of its subsidiaries voluntarily filed for Chapter 11 reorganization in a court in Austin, Texas yesterday. A hearing will be held on 17th December.

This move will unlock $245m funding that will see backers take over parts of the business, which had raised $13bn to be a sovereign source of battery cells for electric vehicle makers such as VW and BMW and stationary energy storage systems (ESS) for renewable energy projects.

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 restructuring, This has seen a plant in California sold to Lyten to make lithium-sulfur batteries and a joint venture in Sweden taken over by its partner Volvo Cars.

Northvolt Ett, the company’s flagship battery gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, Sweden will remain operational as Northvolt ramps up production to meet commitments to its customers.

“By enabling the company to restructure its debt, appropriately scale the business to current customer needs and secure a sustainable foundation for continued operation, these Chapter 11 filings will help Northvolt to implement the decisions made as part of its strategic review to rescope the business and prioritize commitments to customers,” said the company

“The company will continue to make deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees,” it said.

This unlocks $145 million held as cash collateral, while Swedish truck maker Scania is putting in $100m but will take over part of the battery making operation. Scania is part of the Traton group, owned by Volkswagen, which had a joint venture plant with Northvolt.

“This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” said Tom Johnstone, interim Chairman of the Board. “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.”

As part of the restructuring process, which is anticipated to be completed in the first quarter of 2025, Northvolt will evaluate proposals for new investment from both strategic and financial investors, as well as existing lenders, shareholders and customers.