Northvolt, once heralded as Europe’s flagship battery manufacturer for electric vehicles (EVs), has filed for Chapter 11 bankruptcy protection in the U.S., marking a significant blow to Europe’s EV ambitions. The Swedish company announced the decision on Thursday, stating that it had only $30 million in cash—enough to sustain operations for just one week—against debts totaling $5.8 billion.
The company will continue operating during the bankruptcy process, supported by $100 million in new financing from its major shareholder and customer, Swedish truck manufacturer Scania. This financing is part of a broader $245 million package to help stabilize Northvolt during its restructuring.
Northvolt, which employs 6,600 staff across seven countries, had been a key player in Europe’s push to create a homegrown EV battery industry. The company’s rapid rise was fueled by its aim to reduce Western automakers’ dependence on Chinese suppliers like CATL and BYD, which dominate 85% of global battery-cell production.
However, Northvolt faced significant hurdles, including missed production targets, the loss of major contracts, and insufficient funding. Slowing EV demand in Europe compounded these challenges, leaving the company unable to secure the capital needed to restructure its operations. The filing comes after weeks of discussions about potential survival options, including new investments.
Volkswagen, Northvolt’s largest shareholder with a 21% stake, stated it was monitoring the situation closely but declined to comment on how the bankruptcy might affect its own EV plans.
Northvolt aims to complete its restructuring by the first quarter of 2025. As part of the process, it will explore additional investments from strategic and financial stakeholders, including existing lenders and shareholders. Interim board chairman Tom Johnstone described the bankruptcy as a step toward securing Northvolt’s mission to build a European base for battery production.
Despite the bankruptcy, Northvolt remains operational and retains a production capacity of 300,000 batteries annually at its plant in Skellefteå, Sweden. A Houston court is expected to approve routine motions in the coming days, including payroll continuation and the release of $51 million from Scania’s loan.
The bankruptcy underscores the challenges facing Europe’s battery sector, which has seen billions invested in startups like Northvolt. While EV adoption in Europe is growing, it has lagged behind initial industry projections, leading to excess production capacity and stiff competition from Chinese manufacturers.
Northvolt’s difficulties mirror broader issues in the industry, including high production costs, limited demand, and reliance on public and private investment. Swedish Deputy Prime Minister Ebba Busch reaffirmed the government’s support for the EV battery industry but ruled out direct government intervention in Northvolt.
Northvolt’s restructuring offers a chance for the company to regain stability, but the bankruptcy is a stark reminder of the financial and operational risks in Europe’s transition to electrification. Whether Northvolt can bounce back and continue its mission will depend on the success of its restructuring efforts and the ability to secure long-term investment.
