Northvolt, the Swedish maker of battery cells for electrical automobiles, stated on Thursday it has filed for Chapter 11 chapter safety within the U.S., dealing a blow to Europe’s hopes that its most developed battery participant would cut back Western automotive makers’ reliance on Chinese rivals.
Northvolt stated it has solely sufficient money to help operations for a few week and stated it has secured $100 million in new financing for the chapter course of. It stated operations will proceed as regular in the course of the chapter.
“Northvolt’s liquidity image has turn out to be dire,” the corporate stated in its Chapter 11 petition, filed in U.S. Chapter Courtroom in Houston. The corporate, which has operations in California, has about $30 million of money, which may help its operations for under a few week. It has $5.8 billion in money owed.
Northvolt, which employs round 6,600 employees throughout seven nations, stated it expects to finish the restructuring by the primary quarter of 2025.
Northvolt remodeled in a matter of months from Europe’s greatest shot at a homegrown electric-vehicle battery champion to an organization struggling to remain afloat by slimming down, hobbled by manufacturing issues, the lack of a significant buyer and an absence of funding.
Europe has been hoping that Northvolt would cut back Western automotive makers’ reliance on Chinese language rivals reminiscent of battery maker CATL and EV and battery maker BYD.
Northvolt stated the $100 million in a brand new mortgage is a part of $245 million in financing help for the chapter. Swedish truck maker Scania, a shareholder and its largest buyer, stated on Thursday that it was loaning $100 million to Northvolt to help the manufacturing of electrical car battery cells in Skellefteå, northern Sweden.
“This decisive step will enable Northvolt to proceed its mission to determine a homegrown, European industrial base for battery manufacturing,” Tom Johnstone, interim chairman of Northvolt’s board, stated in an announcement, noting the help Northvolt has acquired from present lenders and prospects.
As a part of the restructuring, Northvolt will consider proposals for brand spanking new cash funding from strategic and monetary buyers, in addition to present lenders, shareholders and prospects, he stated.
Volkswagen, Northvolt’s prime shareholder with a 21% stake, stated it had taken word of the submitting and was in shut contact with the Swedish agency. It declined to touch upon potential repercussions by itself enterprise.
Stiff competitors
Funding group Vargas, a co-founder of Northvolt and one in every of its largest shareholders, stated the chapter would enable the corporate to deal with monetary challenges and keep its aggressive edge in producing high-performance battery cells.
Handelsbanken analyst Hampus Engellau stated the chapter submitting would give the corporate some short-term respiration house. Even so, he stated, “This tells us that they haven’t discovered buyers and raised the capital wanted to restructure their enterprise.”
Northvolt had been discussing the potential of submitting for Chapter 11 chapter safety in america as one in every of a number of choices for survival, two sources conversant in the matter informed Reuters final week.
Northvolt has led a wave of European startups investing tens of billions of {dollars} in battery manufacturing to serve the continent’s automakers as they change from internal-combustion engines to EVs.
However EV demand is rising at a slower tempo than some within the business had projected, and competitors stays stiff from China, which controls 85% of world battery-cell manufacturing, in line with Worldwide Vitality Company information.
At a courtroom listening to late Thursday, U.S. Chapter Choose Alfredo Perez permitted some routine preliminary steps in Northvolt’s chapter, together with permitting the corporate to pay wages owed to workers and draw the primary $51 million of the Scania mortgage.
On Monday, Reuters reported that Northvolt had missed some in-house targets and curtailed manufacturing at its battery-cell plant in Skellefteå, underscoring the problem of ramping up output.
The corporate’s courtroom submitting on Thursday stated it had capability to supply 300,000 batteries a 12 months.
In October, Northvolt struck a deal that gave entry to a small sum of money whereas talks on an even bigger financing bundle continued, enterprise day by day DI reported.
These talks had turn out to be harder in latest weeks, one of many sources conversant in the Chapter 11 plan stated.
Lately a number of Swedish firms have opted for Chapter 11 chapter safety filings, reminiscent of Scandinavian airline SAS and debt collector Intrum, a course of that permits administration to retain management over the corporate and run operations.
Swedish Deputy Prime Minister Ebba Busch stated on social media platform X that the federal government continues to help the EV battery business and hopes that the restructuring will assist flip round Northvolt’s fortunes. Busch informed Reuters on Tuesday that the Swedish authorities had no plans to take a stake in Northvolt.
—By Dietrich Knauth, Marie Mannes, Terje Solsvik and Anousha Sakoui, Reuters
Christina Amann contributed to this report.
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