A Subsidiary Of Europe's Biggest Battery Maker Has Filed For Bankruptcy After Announcing Job Cuts

According to Reuters, Swedish power battery maker Northvolt said on October 8 local time that its subsidiary Ett Expansion AB has filed for bankruptcy after the project it was developing was canceled, while other companies continue to integrate their businesses. 

Northvolt said in a statement that all issues related to Ett Expansion AB will be managed by a bankruptcy trustee.

Northvolt stressed that Ett Expansion AB is one of more than 20 different entities within the Group and its bankruptcy filing is not related to any other legal entity within the Northvolt Group. The company also stressed that Northvolt will continue to communicate with stakeholders and is focusing its resources on accelerating production of large-scale battery manufacturing and fulfilling its commitments to automotive customers. 

Founded in 2017, Northvolt is Europe's largest domestic battery maker and has secured more than $10 billion in equity and debt financing from investors including Volkswagen Group. 

But with its own production woes, weak demand for electric vehicles in Europe and struggling to cope with competition from China, Northvolt sparked further concerns in September when it said it would cut costs and efficiency and cut 1,600 jobs. (Battery giant to cut 1,600 jobs!) 

Specifically, in June this year, BMW chose to cancel the battery long-term contract worth 2 billion euros (about 15.73 billion yuan) signed with Northvolt in 2020; Customers such as Scania, Volkswagen's commercial vehicle arm, have complained of delays in Northvolt deliveries; In July, Chief Executive Officer Peter Carlsson said Northvolt may delay the expansion schedule of its four main plants and will abandon plans to build a plant in Sweden to produce cathode active materials (CAM) for batteries. 

According to Carlson's current plan, the company aims to achieve 16GWh of annual production in Europe by 2026 and capture 25% of the European market by around 2030, three years later than originally planned and three quarters less than originally planned.

On the other hand, the poor performance has also strained Northvolt's finances. Financial data show that in 2023, Northvolt's revenue was $128 million (about 910 million yuan), an increase of 19.6%, while the net loss was as high as $1.168 billion (about 8.29 billion yuan), expanding by three times. 

Northvolt had agreed a $5 billion green loan program with lenders at the beginning of the year to fund the expansion of its plant in Sweden, but the cancellation of the construction project last month put funding at risk. 

But on Sept. 24, a Northvolt spokesperson revealed that the company had made significant progress in raising funds. Goldman Sachs and BlackRock have been working to raise more capital for Northvolt, according to a filing.