Northvolt unit files for bankruptcy as expansion plans are halted

Northvolt Ett Expansion AB managed the construction of the project at its flagship factory in Skelleftea, said a statement on Tuesday. The company said last month it would suspend construction as it faces a deepening liquidity crisis.

“We have been working for several weeks to find another solution,” a Northvolt spokesperson said in an email. “Unfortunately, this did not work out and we have therefore filed for bankruptcy of the subsidiary.”

Cutting off the unit from the rest of the group could buy Northvolt time to work on a broader fundraising effort as the electric vehicle battery maker tries to straighten out its shaky finances. Still, the move illustrates the urgency of Northvolt’s problems, while also risking irritating suppliers who can’t collect the money owed.

The company said it continues to work on a strategic review aimed at strengthening its core businesses.

“We are in the middle of a financing process and we plan to come back with more information later,” the company said.

The filing in Sweden marks a deepening crisis at Northvolt, which has received about $10 billion in debt and equity financing since its founding in 2017.

The expansion plan at Northvolt Ett was suspended last month as part of a package of wider measures to stabilize the company’s finances. The battery maker has received strong support from governments, customers and investors in its attempt to build an independent European supply chain for electric vehicles.

Now Northvolt is facing a cash crisis after production faltered at its main factory near the Arctic Circle. Bloomberg reported last week that the company has also pulled back on aggressive expansion in Europe and North America as it tries to build the production scale needed to compete with cheaper Chinese producers.

Slowing demand for electric vehicles in key markets this year has also made the outlook for Northvolt bleak.

Although the unit that filed for bankruptcy had no direct employees, it did have liabilities, including 606 million Swedish krona ($58.2 million) in debts to suppliers, 325 million kroner to companies within the group and 554 million kroner in accruals , the report said. last annual report at the end of 2023. Assets at the time amounted to 10 billion crowns, according to court documents seen by Bloomberg News.

The unit’s bankruptcy filing does not affect any of the other legal entities in the broader group, Northvolt said. In a letter to suppliers seen by Bloomberg News, the company indicated that some of those affected also do business with other parts of Northvolt.

The company’s “strong intention” was to maintain these working relationships, and urged its suppliers to “continue to engage with us in the normal manner regarding these deliveries.”

The subsidiary that filed for bankruptcy had registered debts with Sweden’s enforcement agency totaling 460,000 kroner, an amount that was due on Monday, according to a report by Swedish news magazine Affarsvarlden.

The company said a trustee will now manage all contacts with the affected unit. The broader group “continues to engage with stakeholders for continued collaboration across Northvolt Group’s ongoing operations,” the report said.