Sweden’s Northvolt files for bankruptcy
In August 2023, China imposed export restrictions on gallium and germanium. Gallium is used in compound semiconductors, which are often used to improve transmission speed and efficiency in radars. Germanium is used in night-vision goggles and the solar cells used to power many satellites.
Last December, China imposed export controls on graphite, a key raw material for making electric vehicle batteries. In September this year, the country started restricting the export of antimony, which can be used in military equipment such as infrared missiles, nuclear weapons and night-vision goggles, and as a hardening agent for bullets and tanks.
Sweden’s Northvolt files for bankruptcy, is now on the blink! Is this the result of China’s Restriction of export control of Gallium and Germanium? Or more likely, GRAPHITE? Is this an adverse consequence of “over-reliance on Chinese resources”?
Reuters • November 22, 2024 ~ Bloomberg
Northvolt, the Swedish maker of battery cells for electric vehicles, said on Thursday it has filed for Chapter 11 bankruptcy protection in the US, dealing a blow to Europe’s hopes that its most developed battery player would reduce Western car makers’ reliance on Chinese rivals.
Northvolt said it has only enough cash to support operations for about a week and said it has secured $100 million in new financing for the bankruptcy process. It said operations will continue as normal during the bankruptcy.
Peter Carlsson took responsibility for the dramatic collapse during a town-hall meeting with employees on Friday morning, the Stockholm-based company said.
Northvolt was Europe’s best-funded start-up, having raised more than $15bn from investors and governments, but was left with just $30mn in cash — enough to operate for a week — before its bankruptcy filing under US Chapter 11 rules that gives it protection from creditors.
“The Chapter 11 filing allows a period during which the company can be reorganised, ramp up operations while honouring customer and supplier commitments, and ultimately position itself for the long term. That makes it a good time for me to hand over to the next generation of leaders,” Carlsson said.
The former Tesla executive founded Northvolt in 2016 and positioned it as Europe’s answer to the growing dominance of Asian players in battery manufacturing such as China’s CATL and BYD, Japan’s Panasonic and South Korea’s LG and Samsung.
Northvolt gathered more than $50bn in orders from automotive groups such as Volkswagen, BMW, Scania and Porsche as well as billions more in capital from the same groups and from financial investors such as Goldman Sachs and BlackRock.
“The biggest issue is that batteries are not easy to make and Northvolt haven’t satisfied the supply demands of their customers – that is a management issue,” said Andy Palmer, founder of consultancy Palmer Automotive said.
“The Chinese are technologically 10 years ahead of the West in batteries. That’s a fact,” he said.
But Northvolt said late on Thursday that it was filing for Chapter 11 bankruptcy in the US with $5.8bn in debts, so that it could access $145mn in cash and $100mn in fresh financing from truckmaker Scania. It is now looking for one or more investors to provide it with future financing to exit Chapter 11.
Northvolt has struggled to ramp up production at its sole factory in Skellefteå, just below the Arctic Circle in northern Sweden.
Northvolt’s financial collapse deals a blow to Europe’s plan to set up its own battery industry to power electric cars, stirring a debate about whether it needs to do more to attract investment as startups struggle to catch up with Chinese rivals.
Its plans for factories in Germany and Canada remain unaffected by Chapter 11 as they have received significant subsidies from the respective governments.
The company will begin searching for a new chief executive immediately.
Its present leadership consists of Pia Aaltonen-Forsell, chief financial officer; Matthias Arleth, a former VW executive who is now head of cells and who will also take the role of chief operations officer; and Scott Millar, an executive at Teneo who has become chief restructuring officer.
Current and former employees have told the Financial Times that the fall of Northvolt was due to a litany of issues, from mismanagement and overspending to poor safety standards and over-reliance on Chinese machinery.
Several investors had privately urged Carlsson to resign to take responsibility for Northvolt’s dramatic fall from grace; but he warns Europe would regret it in 20 years time if Northvolt retreated.
Joel
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