Northvolt bankruptcy deals major blow to Europe’s battery ambitions

Northvolt, Europe’s standard bearer for building a domestic electric-vehicle supply chain, has filed for bankruptcy. The Swedish battery maker said it would restructure under Chapter 11 of the US bankruptcy code, enabling it to access fresh funds. CEO and co-founder Peter Carlsson has stepped down, saying the firm will need 1-1.2 billion dollars to get back on top.

Founded in 2016 by two former Tesla executives, Northvolt managed to win the backing of major financiers and customers, including Goldman Sachs, BMW, Volkswagen and Siemens. Plans to construct a battery plant in Sweden were quickly expanded to multiple facilities across Europe and North America. Meanwhile, ramping production in what was advertised as “Europe’s first homegrown gigafactory” proved far more difficult than anticipated. Last year, the output of the Skellefteå plant was less than 1 percent of full capacity, according to the Financial Times.

“I should have probably pulled the brake earlier on some of the expansion paths to make sure that the core engine was moving according to plan,” Carlsson comments. He attributes the delays to the difficulties associated with a highly diversified workforce in terms of nationalities, less-than-optimal working relations with Chinese and Korean equipment makers (for which Northvolt was the first Western customer) and the impact of the COVID pandemic. “In hindsight, we were overly ambitious in the timescale that we could achieve it.”