Battery maker Northvolt files for bankruptcy in Sweden

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STOCKHOLM - Swedish electric car battery maker Northvolt has filed for bankruptcy in Sweden, dealing a blow to European efforts to challenge Asia's dominance in the key sector.

Founded in 2016, Northvolt has struggled under a mountain of debt, slow demand and production delays.

The company had filed for bankruptcy protection in the United States in November to buy time to find new investors, but its efforts ultimately failed, leaving its 5,000 employees with an uncertain future.

Northvolt said in a statement Wednesday that despite pursuing "all available options to negotiate and implement a financial restructuring ... the company was unable to secure the necessary financial conditions to continue in its current form".

"Clearly, this is not an outcome we had hoped for," Northvolt interim chairman Tom Johnstone told a press conference.

The battery maker said in its US Chapter 11 bankruptcy filings that it owed $5.8b.

"With limited time and financial resources available, the company was unable to conclude the necessary agreements to secure its future," Northvolt said.

'Foundation'

Northvolt said "a Swedish court-appointed trustee will now oversee the process, including the sale of the business and its assets and settlement of outstanding obligations."

It will be up to the trustee to decide what actions to take regarding Northvolt's subsidiaries in Germany and North America, which are not filing for bankruptcy in their respective jurisdictions.

Johnstone said he hoped the outreach that had already been undertaken with investors would help the trustee "identify and secure such financing in the near-term."

"Though today marks the end of this chapter, we are hopeful that the foundation we have built, the technology, the expertise, and the commitment to sustainability, will continue to drive change in this industry," he told reporters.

In January, shareholders agreed at an extraordinary general meeting to allow the financially-strained company to continue operating.

Northvolt's two biggest shareholders are German carmaker Volkswagen -- also in financial difficulty -- and US investment bank Goldman Sachs.

The company said "rising capital costs, geopolitical instability, subsequent supply chain disruptions, and shifts in market demand," had "eroded its financial position".

Production delays caused the company to lose an order from BMW worth €2b ($2.2b) last year.

In September, the Swedish company said it was slashing 1,600 jobs -- a quarter of its staff -- and suspending the expansion of its Skelleftea site in northern Sweden.

Last year, it said it hoped to reach an annual production of over one GWh this year -- well below the facility's intended capacity of 16 GWh.

One GWh is enough to equip 20,000 average-sized cars.

Maintaining production

Swedish Prime Minister Ulf Kristersson, who has ruled out a government rescue, told news agency TT on Wednesday that "the state will do its part, in the best possible way".

Speaking at a press conference, energy minister Ebba Busch said the government hoped that Northvolt would be able to continue operations during the bankruptcy process.

"Of course, I hope that a new long-term owner for the business can be found," Busch said.

The court-appointed trustee, Mikael Kubu, told public radio SR that he hoped to "maintain production" until buyer a could be found.

Europe accounts for just three per cent of global battery cell production, but has set its sights on 25 per cent of the market by the end of the decade.

The company said it had recently completed its first one million battery cells for an unspecified European customer.

In an early March report, the International Energy Agency (IEA) said that Northvolt's financial struggles underscored "the difficulties of competing with Asian producers, with smaller manufacturers struggling to scale up production and reach sufficient yields."

The bankruptcy -- which local media called the biggest in modern Swedish history -- could have a severe social impact in northern Sweden, where Northvolt had concentrated its operations.

The Skelleftea municipality said it was a "hard day" for the area.

"At the same time, we need to remember that Skelleftea's development journey started long before Northvolt and that many important investments and business set-ups are taking place here," Kristina Sundin Jonsson, municipal manager, said in a statement.