Article content

(Bloomberg) — Northvolt AB sought bankruptcy protection for one of its units in a bid to limit the financial fallout from the troubled battery maker’s now-halted expansion in northern Sweden.

Northvolt Ett Expansion AB was managing construction of the project at its flagship plant in Skelleftea, according to a statement on Tuesday. The company said last month it was suspending the build-out as it confronts a deepening liquidity crisis.

“We have been working for several weeks to find another solution,” a Northvolt spokesman said in an email. “Unfortunately, this has not been successful, and therefore we have filed for bankruptcy for the subsidiary.” 

Article content

Sealing off the unit from the rest of the group could buy time for Northvolt to work on a broader fundraising that would steady the electric-vehicle supplier’s shaky finances. While a slimmed-down company may be more appealing for investors, Tuesday’s move illustrates the gravity of the strains on Northvolt, and risks alienating suppliers that are needed to continue its operations.  

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

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

The filing in Sweden 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 company also faces a tax bill of about $28 million on Oct. 14, potentially its next test of liquidity, Swedish Television reported.

The plan to expand at Northvolt Ett was suspended last month as part of a package of wider measures to stabilize the company’s finances. The battery maker drew major backing from governments, customers and investors as it sought to stand up an independent European supply chain for electric vehicles. 

Article content

Article content

The developing cash crunch follows setbacks in Northvolt’s production ramp-up at its main plant near the Arctic Circle. Bloomberg reported last week that the company has also slowed projects in Germany and Canada that had been fast-tracked in order to quickly build the manufacturing scale needed to compete with lower-cost Chinese producers. 

Slowing EV demand in key markets this year has also dimmed the outlook for Northvolt.

While the unit that filed for bankruptcy had no direct employees, it carried liabilities including 606 million Swedish kronor ($58.2 million) of debt to suppliers, 325 million kronor to companies within the group and 554 million kronor in accruals and deferred income at the end of 2023, according to its latest annual report. Assets at the time stood at 10 billion kronor, according to court documents seen by Bloomberg News.

The unit’s bankruptcy filing doesn’t relate to any of the other legal entities in the wider 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. 

Article content

The company’s “strong intention” was to maintain those working relationships, and urged its vendors to “please continue to keep in contact with us in the normal way on those supplies.”

Northvolt’s founder and its CEO have both said they’ll support the round of financing the company is working on. BMW AG has ruled out participating after canceling a €2 billion battery order earlier in the year, Bloomberg News reported last week. Volkswagen AG, the battery maker’s biggest investor, has said it supports the plan to ramp up production. It declined further comment on Tuesday. 

The Northvolt subsidiary filing for bankruptcy had debt registered with the Enforcement Agency in Sweden totaling 460,000 kronor, 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 dialog with stakeholders for continued cooperation within Northvolt Group’s ongoing operations,” it said.

—With assistance from Christopher Jungstedt and Monica Raymunt.

(Updates with Volkswagen comment in 14th paragraph)

Article content