Swedish battery cell manufacturer Northvolt has filed for bankruptcy protection, marking one of Sweden’s largest corporate bankruptcies and ending Europe’s hopes of competing with Chinese companies in the same field.
Northvolt has raised more than $10 billion in equity, debt, and public financing since its founding in 2016. Volkswagen is one of its largest shareholders, with a 21% stake, followed by Goldman Sachs with a 19% stake.
According to official data, Northvolt’s debts exceeded $8 billion across its nine subsidiaries spread across several European countries by the end of January. This bankruptcy is one of the largest in Swedish corporate history, and the most prominent since the car manufacturer Saab Automobile more than a decade ago.
The European automotive sector is facing intense competition from Chinese companies, particularly in the electric vehicle and battery and accessory industries. Hopes were pinned on Northvolt to breathe new life into European and Western automakers and reduce their dependence on Chinese manufacturers.
Northvolt’s bankruptcy declaration does not include all of its subsidiaries, the main branch in Sweden was officially declared bankrupt, while the remaining subsidiaries are still operating normally; however the overall situation is not good, and other companies may follow the main branch.
The bankruptcy of Northvolt is not a simple matter with no consequences. Rather, the issue is large and complex, involving various Western automakers. German manufacturer Porsche, which had supply contracts with the bankrupt company, announced that it had begun searching for alternatives after it became clear that Northvolt had…
Northvolt’s financial problems and accumulated debts were the primary factors in the bankruptcy filing, but it appears that the accumulated debts were also due to the company’s failure to fulfill its obligations to its partners. German automaker BMW canceled a $2 billion order last June after the company failed to fulfill a long-term battery cell supply contract signed in 2020.
Northvolt’s bankruptcy highlights the powerlessness of the European auto industry in the face of the Chinese giant. Despite the measures taken by European Union leaders to protect and strengthen the Western auto industry, the reality is that Europe will not be able to regain its leading position in the auto industry, at least in the foreseeable future.
