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After the flying taxi manufacturer Lilium, it is currently dismantling another European (presumably former) tech unicorn on which very high hopes rested: Northvolt, a battery manufacturer from Sweden for European car companies, is currently apparently seeking Chapter 11 protection from creditors due to massive financing problems or even considers bankruptcy.
At the beginning of 2024, Northvolt was still one of the leading ClimateTech companies in Europe, if not worldwide. In January, former Tesla manager Peter Carlsson’s company secured project financing worth a whopping $5 billion. 23 commercial banks, the European Investment Bank and the Nordic Investment Bank provided the loan at the time, based on the refinancing of a previous loan worth $1.6 billion as well as long-term purchase agreements from customers such as BMW and Volkswagen.
Northvolt even became a political issue in Germany because they were fighting to open a location. Finally, in March, still-Chancellor Olaf Scholz, still-Vice-Chancellor Robert Habeck and the Prime Minister of Schleswig-Holstein, Daniel Günther, celebrated the fact that Northvolt announced the start of construction of a gigafactory in Heide and, in a PR-friendly manner, pressed a start button on the construction site. Northvolt was lured with subsidies amounting to 900 million euros. This battery factory, which was supposed to create 3,000 jobs in northern Germany, is in jeopardy.
In total, Northvolt has received more than $15 billion in funding since its launch in 2016 from investors including Volkswagen, Goldman Sachs, Siemens and JPMorgan, as well as subsidies from Canada and Germany. The declared goal: to provide the greenest battery in the world, also with the help of recycling, for the e-mobility transition.
2024 will be a turning point year
But then the tide may have turned or there may have been internal rumblings. Jim Hagemann Snabe resigned as chairman and member of the board of directors in July. Snabe is a very experienced senior manager, including on the board at Deutsche Bank and Siemens. In the same month, Alexander Hartman, who was previously CFO responsible for the 15 billion in financing, was moved into the role of Chief Transformation Officer and replaced by Pia Aaltonen-Forsell – already a clear indication that there is no longer any financing ran smoothly.
The problems intensified in the summer and, as reported, it became clear by September at the latest that Northvolt needed fresh money. Soon, 20 percent of jobs were cut and locations were closed. At the same time, important partnerships and customers were lost:
- Northvolt has made payments to the joint venture Volvo Cars discontinued – Northvolt’s shares in the joint battery joint venture Novo Energy went to Volvo
- The truck manufacturer Scaniapart of the VW commercial vehicle subsidiary Traton, is looking for alternative battery suppliers to Northvolt
- BMW canceled an order for battery cells worth two billion euros from Northvolt and passed it on to Samsung
- The largest customer and most important investor, Volkswagenis currently in a massive crisis itself and is facing drastic austerity measures (more on that here).
- The VW subsidiary PowerCo builds the Volkswagen Group’s first gigafactory in Salzgitter, northern Germany. The plant was originally supposed to be operated together with Northvolt, but that is no longer being discussed
Northvolt construction site in Sweden is at a standstill. © Northvolt
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Northvolt construction site in Sweden is at a standstill. © Northvolt
” data-medium-file=” data-large-file=” tabindex=”0″ role=”button” class=”size-full wp-image-151010″ alt=”Northvolt construction site in Sweden is at a standstill. © Northvolt” width=”2286″ height=”1276″ srcset=” 2286w, 300w, 780w, 768w, 1536w, 2048w” sizes=”(max-width: 2286px) 100vw, 2286px” data-eio=”p”/ >Northvolt construction site in Sweden is at a standstill © Northvolt
In order to achieve the goal of producing the greenest battery in the world, Northvolt struggled with four construction sites: they had to build new facilities at the same time, find new skilled workers, introduce new processes and develop a new product. Ultimately there were many problems and even deaths:
- Working with Wuxi Lead Intelligence, the world’s largest manufacturer of battery production equipment from China, proved difficult, not least because of language problems
- There have been 47 workplace accidents involving chemicals from 2021 to October 2024
- A worker died in an explosion on a production line
- According to the FT, there will have been at least three more deaths of Northvolt employees in 2023
Swedish government doesn’t want to step in
About a week ago, the Swedish company sent its subsidiary Northvolt Ett Expansion AB, which was supposed to build Europe’s first gigafactory in Sweden, into bankruptcy. Published images show that work on the Gigafactory “Ett” in Skellefteå, Sweden, has been stopped.
Like the Financial Times on Sunday reportedNorthvolt could suffer the same fate as Lilium, the already bankrupt flying taxi manufacturer from Germany. He had to go bankrupt because the German state didn’t want to step in with a loan.
Sweden’s center-right government has consistently rejected a state rescue of the company, while some of its private shareholders have expressed skepticism about investing more money in the loss-making group, the Financial Times reports. That’s why bankruptcy is now a looming possibility.
Northvolt is still trying to rescue
Northvolt officially states that it will continue to examine various options. However, one of Northvolt’s main investors said it expects bankruptcy next week and has written down the value of its investment to zero, the Financial Times reports.
Former and current employees told the newspaper about a range of problems at Northvolt, including mismanagement, poor safety standards, problematic Chinese machinery and a vain attempt to do too much too quickly. A decision on the future of the company is expected in the coming days.
Interview Questions:
1. Can you provide an overview of Northvolt’s plans for becoming a leading battery manufacturer in Europe and their current situation amidst financial challenges?
2. Has the sudden cancellation of projects and orders from major car companies impacted Northvolt’s confidence in their technology and strategy?
3. What challenges has Northvolt faced in their partnerships with other car manufacturers, and how have they attempted to address these issues?
4. What role does the Swedish government play in supporting or providing assistance to struggling tech companies like Northvolt?
5. How has the competition from other battery manufacturers like Tesla and LG Energy Solution affected Northvolt’s ability to secure orders and funding?
6. How has the lack of government support compared to other European countries influenced Northvolt’s decision-making process regarding investments and expansion plans?
7. What steps has Northvolt taken to ensure the safety and sustainability of their battery production processes amidst reports of accidents and chemical leaks?
8. Given the current financial climate and challenges faced by European tech companies, what lessons can be learned from Northvolt’s experience?
9. Do you think it is feasible for Northvolt to recover from its current situation and regain the trust of investors and customers? If so, what measures need to be taken? If not, what can we expect for the future of the company?
