Lack of money instead of giga production, struggle for existence instead of expansion: this has been the case since last week at the latest Northvolt in a new world. The start-up from Sweden has long been Europe’s great hope in the promising market for batteries, which will be needed on a large scale in the future for the electrification of mobility. But that’s over for the time being: Northvolt is almost bankrupt.
On Friday last week Northvolt filed for bankruptcy protection in the USA, a step that is similar to the bankruptcy filing here. Directly Afterwards, company boss and co-founder Peter Carlsson (54) stepped down from the top of the company.
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“Overly ambitious”: Ex-Northvolt CEO Peter Carlsson upon his resignation last Friday in Stockholm
Photo: Christine Olsson / EPA
The temporary end of Northvolt’s dream does not come as a surprise: it has been clear for some time that everything at the company is no longer going according to plan. Reports of problems ramping up battery production had increased. Already in the summer, manager magazin exclusively reported that that BMW had canceled an order worth billions
. Northvolt responded to the difficulties with a savings program, wanted to slow down the pace of growth and cut a total of 1,600 jobs at three locations.
But it didn’t help. Northvolt’s sales have increased steadily in recent years. In 2023, for example, sales rose to around 120 million euros, after almost 100 million euros in the previous year. However, these are paltry amounts compared to the losses that the company posted at the same time. In 2023 alone, Northvolt made a loss of more than one billion euros (see graphic).
At the same time, the battery manufacturer accumulated a mountain of debt. At the time of the application for creditor protection, Northvolt was in trouble with a remarkable 5.8 billion euros. The Reuters news agency reports that there were only liquid assets of 30 million euros left in the coffers – just enough to last a week.
“Looking back, we were overambitious about the timing.”
Ex-Northvolt boss Peter Carlsson on the day of the application for creditor protection
“Looking back, we were overly ambitious when it came to timing,” ex-CEO Carlsson explains the mess. That’s how experts see it too. “Unlike the Asian competition, which has been able to scale up slowly over the years, Northvolt has to start more or less straight away with gigafactories, i.e. very large plants, in order to be competitive,” explains battery expert Tim Wicke from the Fraunhofer Institute for Systems Engineering. and innovation research (ISI) the company’s crisis.
That is expensive and at the same time not that easy, says Wicke opposite the “Tagesschau”
: “Battery production is very complicated and time-consuming. Each step must mesh well with the other, otherwise there will be expensive waste.” The rate of defective parts in the industry when production ramps up is usually around 30 percent – but at Northvolt the proportion could be even higher, says the expert.
So it is probably a mixture of mismanagement and a fatal predicament that has brought Northvolt into its precarious situation. This didn’t just cost co-founder and CEO Carlsson his job. As one of the large shareholders, he will also have to reorganize his private finances. Because the shares in Northvolt are understandably no longer worth as much as they were at their peak.
Owners like VW and Goldman are writing off shares
Carlsson is in good company. As has now become known, Northvolt’s main shareholders are also largely or completely writing off their holdings.
The largest shareholder is Volkswagen-Group with around 21 percent. The Wolfsburg have according to the Financial Times
Apparently already in 2023 they lost full trust in their Swedish battery partner and reduced the value of a large part of the share internally. Volkswagen had gradually invested around 1.4 billion euros in Northvolt. In the 2023 annual report, the investment is still listed at a value of 693 million euros. In connection with Northvolt’s application for creditor protection, write-offs on Volkswagen’s side are now being reported again.
Such a step has apparently also taken place Goldman Sachs decided. The US bank, Northvolt’s second-largest shareholder with around 19 percent, is taking a particularly decisive approach. Funds managed by Goldman Sachs have invested almost $900 million in the Swedish company – according to one Financial Times report
These shares are to be written down to zero by the end of the year.
The Scottish asset manager Baillie Gifford is also largely giving up hope: the company, the number six owner with a share of more than 4 percent, now values its stake in Northvolt at just 20 million pounds. At the end of March, Baillie Gifford still had 375 million pounds on its books.
A number of Scandinavian pension funds, which have also invested heavily in Northvolt, are also concerned. Specialist media reported on this a few weeks ago
, state funds such as ATP from Denmark (5.5 percent share) or AP1-4 from Sweden (3.5 percent, invested via the joint investment vehicle 4 to 1 Investments) are in talks with the battery start-up. In quite critical conversations, as can be assumed given the increasingly difficult situation.
At Northvolt, in addition to the shareholders, public coffers also have money in the fire, namely in the form of subsidies. From a German perspective, the factory construction in Heide in Schleswig-Holstein is of particular interest – a project that, according to Northvolt’s calculations, will cost 4.5 billion euros and for which politicians have made high commitments.
300 million euros of German tax money in the fire
At the beginning of this year, the EU Commission approved funding and guarantees worth 902 million euros for the construction in Heide. The federal government and the state of Schleswig-Holstein are supporting the project with around 700 million euros. There are also possible guarantees for a further 202 million euros. An agreement stipulates that state funds of 137 million euros should initially flow. The federal government accounts for around 564 million.
The good news: So far, the promised money has come from Schleswig-Holstein or the federal government according to a report by NDR
nothing has flowed yet. The State Chancellery in Kiel recently made it clear that that Northvolt could expect funding this year. However, that was before the company took the step into bankruptcy protection.
However, German taxpayers cannot watch the developments at Northvolt completely uninvolved. As the NDR also reports, the list of claims that were initially put on hold as part of the creditor protection procedure in the USA also includes a convertible bond from the Kreditanstalt für Wiederaufbau (KfW). Their volume: at least 600 million euros.
Schleswig-Holstein guarantees KfW’s convertible bond
This money is definitely in danger, and that is a problem for heavily indebted Schleswig-Holstein: the state guarantees half of the amount to KfW.
In plain language, this means: In the worst case, taxpayers between the North and Baltic Seas are at risk of 300 million euros at Northvolt. And at least Schleswig-Holstein FDP MP Bernd Buchholz (63) has already said that the country must expect losses.
Northvolt emphasizes, however, that the German subsidiary is financed independently of the parent company and is not part of the Chapter 11 proceedings. “The money from the convertible bonds is in German accounts and will be used in coordination with KfW for the construction of the battery factory in Heide,” the company told NDR.
In any case, the money from the state treasury will not be enough to secure the future of Northvolt. According to former boss Carlsson, the company currently needs 1 to 1.2 billion euros to get back on track.
This is a magnitude that is far from being covered by the additional funds that flow to Northvolt as part of the creditor protection process. Thanks to the Chapter 11 rules, the company now has access to new sources of financing. However, the amounts appear rather modest given the lack of money: $145 million comes from collateral that has been set aside so far. The Swedish truck manufacturer Scania, a major customer of Norhtvolt, has pledged a further $100 million as a loan.
Billions needed
So investors are being sought. But they may be difficult to find, not least given the developments at Northvolt. The country Canada In any case, where the battery start-up also wants to set up production together with Volkswagen has already declined.
In Canada, Northvolt is already feeling the next headwind: that of the future US president Donald Trump (78) announced tariffs of 25 percent on exports to the USA could be “the final nail in the coffin for Northvolt’s Canadian project,” writes the “Börsenzeitung”.
Ultimately, Volkswagen wants to use the Northvolt batteries in cars that will be delivered to the USA for final completion there, according to the newspaper. This means they would be directly affected by Trump’s new tariffs.
Investors urgently wanted
Northvolt cannot expect any money from the Swedish government either. Stockholm has already announced that it does not want to take over any shares. Instead demanded Sweden this week called on the EU in Brussels to provide more support for battery production – this is also a way to address the problems.
It therefore looks like the classic scenario for companies going awry: Northvolt will probably ask its existing shareholders for further funds.
It remains to be seen to what extent previous financiers such as Goldman Sachs, the Swedish investment company Vargas Holding or Baillie Gifford are prepared to make such additional contributions. However, at least in the case of the main shareholder Volkswagen, restraint seems to be foreseeable: the group is itself in one of the biggest crises in its history and has already announced extensive job cuts and location closures.
More on the topic
All in all, the outlook for Northvolt is rather unpleasant. At least one person remains optimistic. “Of course Northvolt has problems,” said Federal Economics Minister Robert Habeck (55; Greens) on the occasion of the Chapter 11 opening in the USA. “But these are technically solvable problems.”
The creditor protection proceedings could end well, said Habeck. Many companies have already rehabilitated themselves. He knows of investor interest and hopes that a reorganization will succeed.
“We need our own European battery production,” is the credo of the Green Economics Minister. One thing is clear: Habeck’s future in office is at least as uncertain as that of Northvolt.