The dramatic rise and fall of Northvolt, Europe’s one-time battery champion, has many of the elements of a Nordic noir thriller.
A desire for global domination, intense hubris and disagreements, vast amounts of cash and several unexplained deaths: the Swedish start-up has had it all on its journey to filing for Chapter 11 bankruptcy on Thursday.
Founded in 2016 with the promise of loosening the stranglehold of Asian companies on battery manufacturing, Northvolt became the symbol first of Europe’s ambitions, and then its failings to find a place in the green transition against the massive subsidies of China and President Joe Biden’s US.
Now, as it aims to find a fresh $1.2bn in investment on top of $15bn it has already received, there is a question of what can be salvaged for Northvolt.
“There was so much promise at the beginning, and it all feels so crushing right now. It has been a real rollercoaster ride,” a former longtime Northvolt executive said on Friday, just after its co-founder Peter Carlsson resigned as chief executive.
Northvolt was started by Carlsson and fellow ex-Tesla executive Paolo Cerruti with the premise of using the Nordic region’s abundant and cheap green energy to challenge the likes of China’s CATL and BYD in batteries, a crucial technology for an automotive industry that employs almost 14mn people in Europe.
It soon gained the commercial and financial backing of some of the biggest industrial names in Europe. These included not just automotive groups such as Volkswagen, BMW and Scania but the likes of Siemens and ABB. By 2022, Northvolt had $55bn in customer orders, and this year reached $15bn in equity and debt capital as well as government support.
What started off as plans for just one Swedish factory — in the sub-Arctic town of Skellefteå where production started in late 2021 — quickly ballooned. Northvolt was soon planning a second Swedish battery factory, and plants in Germany and Canada, as well as an energy storage facility in Poland, and separate cathode and recycling businesses in Sweden.
But its biggest problem remained its inability to increase production in Skellefteå, where last year it produced less than 1 per cent of the batteries its capacity theoretically allowed.
“I should have pulled the brakes earlier on the expansion path to make sure the core engine was moving according to plan,” was Carlsson’s explanation on Friday of what had gone wrong. This led to what he called “gravel in the machinery”.
A combination of factors had added up to big delays, according to Carlsson. This included bringing in thousands of new workers from more than 100 different nationalities, getting new processes right, the effect of the coronavirus pandemic on the construction phase, being the first western customers of Chinese and Korean equipment makers. The machinery worked, but needed continual support from Asia, leading to communication difficulties with Northvolt workers.
A person close to Northvolt said Skellefteå’s remote location became a problem. “It’s not easy to attract the right people here. In ramp-ups, it’s normally easy to steal talent from nearby companies. That’s not the case here.”
“Also, when you launch a plant, then in a big corporate organisation you can get the best people to come and help you. This is what we are really missing.”
Current and former Northvolt employees told the Financial Times of other issues: poor safety standards, unnecessary spending and widespread mismanagement. “It’s not a single item,” conceded Carlsson. “In hindsight, we were overly ambitious in the timescale that we could achieve it.”
Operating a battery factory when not producing at scale is a hugely costly business. Northvolt, which made a net loss of $1.2bn last year, had $2.1bn of cash at the start of this year. But by Thursday, when it filed for bankruptcy, it had just $30mn — enough to operate for about a week. Its debts were $5.8bn.
The first sign of trouble to the outside world came in tragic circumstances a year ago when an explosion inside the Skellefteå factory killed one Northvolt worker. Swedish environmental prosecutors later served it with an investigation of suspicion of gross manslaughter.
Northvolt stopped production at the factory in the aftermath of the death, leading to delays for its biggest current customer, Scania. The start-up’s troubles intensified when BMW, one of Northvolt’s earliest shareholders and customers, pulled out of a $2bn contract in June as it was unsure of getting the batteries on time.
In a separate incident in December last year, a construction worker was killed and another injured when a fork stand fell on them during the building of a concrete foundation for Northvolt’s factory expansion.
Three unexplained deaths of Northvolt workers away from the factory also took place in early 2024. The company has said it has found no connection between the deaths, but police are investigating.
Northvolt was in the middle of negotiating a further large fundraising round, but the talks stalled. Further attempts to raise capital from existing shareholders failed this year, and Northvolt was left looking for emergency financing.
The Swedish government swiftly ruled out any state help, unlike Germany and Canada who had promised billions of dollars in support for their factories. “Some investors lost faith,” said a former Northvolt executive.
A rescue package that was all but agreed earlier this month collapsed just before being announced, leaving Northvolt with little choice other than a Chapter 11 bankruptcy in the US, open to non-US companies that have a presence in the country.
Shareholders have little good to say — either about Northvolt’s management or each other. “Think of the billions of euro that Northvolt has received,” said one. “I’s not just a question of money, but what do I do with the money and how do I make sure I don’t run out of it.”
Others lashed out at Volkswagen and Goldman Sachs, the two biggest shareholders with 21 and 19 per cent stakes respectively. One longtime shareholder said: “VW and Goldman Sachs were not in accord over which steps needed to be taken, which is frustrating.”
Another investor asked: “Why is the government of Sweden not supporting Northvolt if it’s so important?” Many shareholders have already written down the value of their Northvolt investments to zero
All that is irrelevant to Northvolt and its new leadership as they hope to exit Chapter 11 protection in the first quarter of 2025. Carlsson said that Northvolt needed to raise $1bn-$1.2bn in extra financing and was talking to various potential new shareholders, as well as existing investors. Scania is already providing $100mn of new financing, and Northvolt will be able to access $145mn of cash under Chapter 11 proceedings.
Northvolt’s departing chief executive said its operational plan was clear: it is selling or seeking partners for several businesses, delaying its next factories in Germany and Canada and trying to clean up both its shareholder structure and its debts.
“We just need to go through this purification process in the next couple of months. Do I believe that this company has a strong future? It is absolutely so,” said Carlsson.
Others are less certain, while the real winners are existing Asian battery makers that are already producing at scale and increasingly cheaper cost. BMW turned to South Korea’s Samsung to fulfil its $2bn contract. CATL is building plants in Germany and Hungary to service European customers.
“This is a big fight,” said one worker at Northvolt. “If we in Europe aren’t careful, we’ll be eaten up.”
Additional reporting by Harriet Agnew in London and Patricia Nilsson in Frankfurt