Northvolt files for bankruptcy, a blow to the European electric vehicle sector

Swedish battery manufacturer Northvolt ABwhich produces batteries for electric vehicles, has announced that it has filed for Chapter 11 of the United States Bankruptcy Law. This fact is considered a serious blow to the European electric vehicle industry, since the company was the most developed battery manufacturer on the continent.

Northvolt AB manufactures lithium ion batteries, lithium-metal and sodium for electric mobility and energy storage, among other purposes. The company’s flagship battery gigafactory, Northvolt Ett, is located in Skellefteå, Sweden.

The move comes as the battery makerwas struggling to get rescue financingwhich caused the company to only have one week of cash left, which amounted to about 30 million dollars (28.81 million euros). On the other hand, Northvolt AB’s debt amounted to about $5.84 billion (€5.61 billion). The bankruptcy filing will give the company access to about $245 million (234.34 million euros) of new financing, since it is a voluntary reorganization.

These new funds will be divided into two parts. The first part is about 100 million dollars (95.79 million euros) of debtor financing in processwhich is a special type of financing available to companies that choose to restructure through Chapter 11. The second part is some 145 million dollars (138.89 million euros) cash guaranteecontributed by a current Northvolt customer.

The measure will also allow the company scale your operations as needed to best meet current market demands as well as form a solid foundation for long-term operations. In the long term, this decision is expected to help Northvolt build a domestic battery production base.

The company has stated that will continue to operate normally while the reorganization takes place. This includes paying employees’ salaries as usual, along with obligations to key suppliers, as well as deliveries to customers.

Northvolt Labs, based in Västerås, Sweden, and Northvolt Ett will continue to operate normally, as will Northvolt AB’s subsidiaries, Northvolt North America and Northvolt Germany. Northvolt CEO Peter Carlsson announced his resignation after filing for bankruptcy.

Bankruptcy filing expected to help Northvolt build European industrial base

Tom Johnstone, Acting Chairman of the Board of Directors, said on the company’s website: “This decisive step will allow Northvolt to continue its mission to establish its own European industrial base for battery production. Despite the challenges in the short term, this action to strengthen our capital structure “will allow us to capture the continued market demand for vehicle electrification.”

“As a reorganized entity, we aim to establish a resilient base of operations and a competitive platform for innovation and long-term growth that advances our work to build a more sustainable society.”