Northvolt held the key to breaking China’s dependence on electric car batteries. has gone bankrupt

Norhtvolt has gone bankrupt. After weeks of talks and trying to find new financing for the project, the Swedish company that produces batteries for electric cars has filed for bankruptcy in the United States, according to The company itself has confirmed with a statement.

In the statement, the company explains that it is working to meet all its obligations, both with employees and suppliers, and that the bankruptcy filing will allow it to have access to $145 million in cash, which is added to another $100 million. of dollars contributed by one of his clients, who is not mentioned.

From ReutersHowever, they point out that the company only had $30 million in cash. It was enough to keep jobs going for a week. But Northvolt’s problems are that it has a terrible debt amounting to $5.8 billion.

The objective now is to achieve a restructuring of the company before the end of the first quarter of 2025, with the aim of moving forward a company that employs around 6,600 workers.

Nobody dares to finance the great European promise

Until a few months ago, Northvolt was Europe’s great hope to alleviate Europe’s Chinese dependence on batteries for electric cars. However, in a short time the company’s economic outlook has completely changed. Already in September they announced the dismissal of 1,600 employees.

Since then, the company has been working on finding new partners, after The Swedish government will rule out rescuing the company. Movements that, evidently, have not worked. Last Monday, November 18, Reuters It was already anticipated that Northvolt’s production was being reduced in its plants.

The company, in which Volkswagen has a 21% stake, had a an aid of 902 million euros from the German Government (700 million euros in the form of direct aid) to build a plant with the capacity to produce 60 GWh in battery cells. Production was to begin in 2026 and operate at full capacity in 2029.

However, Northvolt lost 1.00 million euros in 2023 due to “multiple challenges and setbacks” that prevented increasing production, in the company’s words reported by Europa Press. The result, among others, is that BMW canceled a contract that amounted to 2,000 million of euros for the continuous delays suffered. Even Volkswagen has suffered such delays.

Northvolt’s dashed hopes represent the electric car landscape in Europe well. The European Union only produces, at the moment, 3% of batteries that are sold in the market. Europe’s intention is to grow until it produces 25%. The challenge is huge since, according to the International Energy Agency), 83% of batteries for cars sold around the world are made in China.

For many years, China has taken control of the manufacturing of this type of battery, even displacing historical countries in the sector, such as South Korea. The dependence on the Asian country, therefore, is enormous and is very bad news for a European Union that has decided to throw itself into the arms of the electric car but whose own institutions declare that we do not manufacture enough batteries.

The lack of partners to support Northvolt reflects a problem of confidence in the company but also calls into question what prospects the market has for the advancement of the electric car in Europe. According to the latest data from ACEAthe electric car has sold 1,172,737 units between January and October. Below the same period in 2023, when 1,232,937 were registered. This 4.9% drop is also reflected in a decrease in market share, going from 14% last year to 13.2%.

In the midst of the market transformation towards electric cars and with emissions regulations that will force the sale of fewer combustion cars and more plug-in vehicles, a large part of the European manufacturers and those that produce here are in a major crisis. Volkswagen is the most relevant head, threatening to close three plants, but Ford has also announced the dismissal of 4,000 employees in Europe. And European competitiveness continues to be questioned.

Photo | Northvolt

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