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European EV Battery Industry Faces Setback: Northvolt Files for Bankruptcy
Europe's leading electric vehicle (EV) battery hope, Swedish battery cell manufacturer Northvolt, has filed for bankruptcy in Stockholm, leaving the European auto industry in a lurch.
The unexpected bankruptcy leaves European automakers scrambling to meet the EU's 2035 zero-emission requirements, despite billions of euros in investments. The filing opens the door for Chinese, South Korean, and Japanese cell manufacturers to dominate the European market, particularly without their own automotive brands.
Northvolt's woes date back to its inability to consistently meet its production and quality control targets for lithium-ion, lithium-metal, and sodium-ion cells, which have been used by the Porsche and Audi brands of the Volkswagen Group. As a result, BMW tore up a $2.1 billion supply contract from 2020 in June 2024, and many of its core European clients have abandoned ship, leading to bankruptcy.
Goldman Sachs, with a 19% stake, and the Volkswagen Group, with a 21% stake, have been significantly impacted. Peter Carlsson, former CEO of Northvolt, resigned in November following a Chapter 11 filing in the USA, and a restructuring process was set to complete this month.
Northvolt's German, Polish, and US operations have been spared from the bankruptcy filings, offering a glimmer of hope for salvation. German Economy Minister Robert Habeck remains optimistic about investors resurfacing.
European automakers are not as hopeful, turning instead to battery cell suppliers like CATL, BYD, SK On, LG, Samsung, and Panasonic. Though Porsche and Volkswagen CEO Oliver Blume continues to believe in a European alternative, the companies are also looking eastward due to necessity.
The failure of Northvolt was attributed to insurmountable problems, which led to the cancellation of the $5 billion green deal loan obtained early last year. Despite the massive setback, the race for European EV dominance continues, with the global auto industry transitioning rapidly towards electrification.
- Goldman Sachs and the Volkswagen Group, significant Northvolt shareholders, are now grappling with the $8 billion debt collapse of the Swedish battery cell manufacturer.
- The bankruptcy of Northvolt has precipitated a race for European EV battery cell suppliers, pushing automakers to court Chinese, South Korean, and Japanese manufacturers like CATL, BYD, SK On, LG, Samsung, and Panasonic for partnerships.
- With Northvolt's German, Polish, and US operations exempt from bankruptcy filings, there remains a slim possibility for the company's survival, a prospect that Germany's Economy Minister Robert Habeck remains optimistic about.
