Swedish lithium-ion battery maker Northvolt has filed for bankruptcy in its home jurisdiction, dealing another blow to the European Union's plans to build up an electric vehicle battery manufacturing industry.

The company says despite pursuing all available options to negotiate and implement a financial restructuring, including a Chapter 11 process in the United States, and despite liquidity support from lenders and key counterparties, it was unable to secure the necessary financial conditions to continue in its current form.

This is the only available solution while the company pursues all realistic options to obtain financing to continue operating during the Swedish bankruptcy process, according to the company’s board.

Following the filing, a Swedish court-appointed trustee will now oversee the process, including the sale of the business and its assets and the settlement of outstanding obligations. The process will be conducted under the Swedish insolvency law.

Northvolt AB, Northvolt Ett AB, Northvolt Labs AB, Northvolt Revolt AB and Northvolt Systems AB filed with the Swedish court. Northvolt Germany and Northvolt North America are not filing for bankruptcy in their respective jurisdictions.

As wholly owned subsidiaries of Northvolt AB, any decisions regarding these entities will be made by the court-appointed trustee of Northvolt AB in consultation with the group’s lenders at the appropriate time.

Green transition

“We set out to build something groundbreaking – to drive real change in the battery, EV and wider European industry and accelerate the transition to a green and sustainable future," says Tom Johnstone, interim chairman of Northvolt’s board of directors.

"The outcome is especially hard considering not only the level of engagement and interest we held with potential partners and investors in recent months, but also the clear improvement and upwards trajectory that we have been seeing in Northvolt's production in Skelleftea, where cell output from serial production lines has doubled and we have secured a 50% improvement in production yield since September.”

The company has called for patience and long-term commitment from all stakeholders. As the bankruptcy process unfolds, the court-appointed trustee will determine the future of Northvolt's businesses and their assets, it adds.

Late last year, Northvolt’s two biggest equity investors, Volkswagen and Goldman Sachs private equity funds, made big writedowns estimated by analysts to be close to US$1 billion each.

Early in 2024, Northvolt signed what was at the time the biggest green loan in Europe. The US$5 billion non-recourse project financing was provided by development banks and commercial banks with cover from the Swedish National Debt Office, Euler Hermes, Kexi, Nexi and K-Sure.