Northvolt filed for bankruptcy in Sweden on Wednesday. This is the latest blow to Europe's attempts to create a battery-making juggernaut that could rival the Chinese giants.
Swedish startups have raised over $14 billion, but have recently been in cash shortages. Northvolt filed for Chapter 11 bankruptcy in the United States in November. Since then, they have been struggling to stop bankruptcy, saving cash and raising new funds.
Those efforts are lacking.
“Northvolt has experienced a series of compounding challenges eroding its financial condition, including rising capital costs, geopolitical instability, subsequent disruption in the supply chain and changing market demand,” the company said in a statement.
European countries and automakers had pinned their hopes on Northvolt, which represents a bold bet on EU battery production. Most battery factories today are constructed and operated by Chinese, Japanese, or Korean companies.
The sick manufacturer had secured a $5 billion debt transaction in January 2024, but struggled to raise revenue as it burned the reported $100 million a month.
Northvolt's fate took a more decisive turn in June 2024 when BMW canceled its $2 billion contract. The battery manufacturer was unable to deliver on time.
To save cash, it fired 1,600 employees and sold assets from the Cooberg division, a Bay Area solid state battery startup that it acquired in 2021.
Northvolt had sought additional funding from lenders, but was unable to reach an agreement with them. That impasse, coupled with previous failures, was not enough to expand the company's runways enough to master the hardships of manufacturing and build a solid customer base.