Northvolt’s future hangs in the balance as bankruptcy looms

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Northvolt’s fate hangs in the balance as the troubled Swedish battery maker considers filing for Chapter 11 protection against creditors or even bankruptcy.

People involved in talks over the future of the once-great hope of Europe’s auto industry said its future was likely to be decided in the coming days after talks on a bailout recently broke down.

Northvolt is still trying to get a short-term financing deal to continue operations, but is also considering other options such as Chapter 11 or bankruptcy as time is running out, according to the same people.

The Swedish group, which has raised more than 15 billion USD in funding from Volkswagen, Goldman Sachs, Siemens and JPMorgan, as well as subsidies from Canada and Germany, tried to become Europe’s answer to the dominance of Asian groups in the crucial battery technology. need for electric cars.

But Northvolt has struggled to ramp up production at its sub-Arctic plant in Skellefteå, northern Sweden, and has faced a growing crisis since BMW pulled a $2bn contract. earlier in the year.

It has cut a quarter of jobs in Sweden and cut work on a number of projects to try to focus on increasing production in Skellefteå, which is only a fraction of the factory’s theoretical capacity.

Sweden’s centre-right government has consistently ruled out a state rescue of the company, while some of its private shareholders have expressed skepticism about putting more money into the loss-making group.

“It’s very fluid, but at a certain point you have to make a decision. Chapter 11 is possible, even bankruptcy is still an option,” said a person involved in the talks, who added that Northvolt still preferred a bailout.

One of Northvolt’s main investors told the Financial Times that they believed an insolvency was likely next week and had written down the value of their investment to zero.

Northvolt said it declined to engage in speculation. “Since the beginning of the strategic review, we have constantly discussed various options, and this has not changed throughout the process. We will communicate findings once we have reached a conclusion as we continue dialogue with our stakeholders,” the company said.

Former and current workers have told the FT of a range of problems with the factory and Northvolt, from poor management and poor safety standards to problematic Chinese machinery and attempts to do too much, too fast.