October 12, 2024: A subsidiary of Swedish battery giant, Northvolt, filed for bankruptcy on October 8 after a project to expand Europe’s first home-grown gigafactory was shelved last month.
The subsidiary had been responsible for a planned tripling of capacity at the group’s Skelleftea facility in northern Sweden, but in September the development was scrapped as part of the beleaguered battery maker’s cost-saving plans.
The expansion of the Skelleftea factory was intended to strengthen Northvolt’s production capacity and support the growing demand for batteries for EVs and energy storage solutions.
But a court-appointed bankruptcy trustee told business daily Dagens Industri that the Northvolt Ett Expansion AB unit had debts estimated at between SEK2 billion and SEK3 billion ($194 million to $290 million).
The troubles at Northvolt reflect a worsening market for battery makers in Europe. Slowing demand, high costs and technical difficulties in the face of overwhelming Chinese manufacturing expansion in recent years has meant that producing batteries profitably and at scale has so far proven an insurmountable challenge for Western companies.
In its statement, Northvolt underlined that the insolvency application filed with the Stockholm District Court related only to the subsidiary Northvolt Ett Expansion AB. The Swedish battery maker explained further that the insolvent company is just one of over 20 different entities within the Northvolt Group.
The halting of plans and insolvency claim, according to the statement, will enable the group to concentrate its resources towards “accelerating production in large-scale cell manufacturing within the fully-built, first phase of Northvolt Ett and delivering on commitments to its automotive customers.”
The filing marks a deepening of the crisis at Northvolt, which has received about $10 billion in debt and equity funding since being founded in 2017.
The subsidiary filing for bankruptcy had debt registered with the Enforcement Agency in Sweden totalling SEK460,000, an amount that was due on Monday, according to a report by Swedish news magazine Affarsvarlden.
The company said a bankruptcy trustee will now manage all contact with the affected unit. The wider group “continues to be in dialogue with stakeholders for continued cooperation within Northvolt Group’s ongoing operations,” it said.
