Europe's Major Investment to Reduce Dependence on Chinese Batteries Has Filed for Bankruptcy.
Northvolt
Once considered a crucial component of Europe's electrification strategy, Northvolt is now facing significant financial challenges. According to Reuters, the company, partially owned by Volkswagen and Goldman Sachs, filed for bankruptcy in Sweden this week. It had previously sought Chapter 11 protection in the United States in November, but this time, its U.S. operations and German projects are not included in the proceedings.
As the situation worsened over recent months, several manufacturers have started discussing alternative suppliers, with many owners already writing off their investments in Northvolt. Porsche is actively looking for alternatives, while Scania has already secured another supplier for its truck battery packs.
Oliver Blume, CEO of Porsche and Volkswagen, expressed at a press conference that he remained “convinced” that having “competent” battery production in Europe would benefit all parties. However, the company only stated that it remains in communication with Northvolt and did not provide further comments regarding the bankruptcy on Wednesday.
European manufacturers invested heavily in Northvolt with the hope of decreasing Western dependence on Chinese battery manufacturers like CATL and electric vehicle producer BYD, as reported by Reuters. The VW Group initially viewed Northvolt as one of many foundational elements in its strategy to surpass Tesla. What once appeared ambitious now seems implausible, especially as Tesla seems to have surpassed a significant turning point in its global growth.
VW's agreement with Northvolt involved millions of dollars for the battery manufacturer's expansion, with the aim of creating a joint venture capable of producing 40 gigawatt-hours of batteries annually. In June, BMW canceled a $2 billion order with Northvolt after the company was unable to meet a contract signed in 2020.
Peter Carlsson, a former Tesla executive and co-founder of Northvolt, stepped down as CEO shortly after the Chapter 11 filing in November, as reported by Reuters. He had previously stated that the company required $1.2 billion to stabilize operations.
“What ultimately led the board to make this decision last night was the lack of a solution to the immediate liquidity needs,” Carlsson informed reporters on Wednesday.
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Europe's Major Investment to Reduce Dependence on Chinese Batteries Has Filed for Bankruptcy.
Porsche and BMW intended to utilize batteries from Northvolt, which is backed by VW, but are currently in discussions with alternative suppliers.