Swedish battery developer and manufacturer Northvolt has made massive losses since bankruptcy talks began. The company had to make substantial write-offs as part of a ‘chapter 11’ debt reorganisation.
Northvolt AB, once a poster child of EU ‘green’ technology, lost close to 3 billion Swedish crowns (around €270 million) before tax in roughly the last month of 2024, while Northvolt Ett, the factory company in Skellefteå, lost over 22 billion Swedish crowns (around €2 billion).
The loss is significantly more when you include the nine Northvolt businesses that are undergoing corporate reconstruction in the US.
Northvolt Systems, with a facility in Poland, reported a loss of 2.8 billion Swedish crowns (around €250 million) and Northvolt Labs, with a research facility in Sweden, reported a loss of 1.6 billion Swedish crowns (around €140 million).
At the same time, the company had a revenue that didn’t even come close.
All things considered, Northvolt carried approximately 58 billion Swedish crowns (€5.2 billion) in debt, while its assets were valued at only about 23.5 billion Swedish crowns (€2.1 billion).
This meant that the company’s equity amounted to 34.3 billion Swedish crowns (approximately €3.1 billion).
“We made the decision to apply for a Chapter 11 process, among other things, to access new financing and restructure the debt. We have been transparent about the challenges that led to this application”, the company said in a reaction to Swedish radio station SR Ekot.
“It takes time and work to reverse the trend, but we are confident in our ability to do so, as we also strongly believe in Northvolt’s long-term potential.”
Swedish EV battery maker Northvolt has filed for Chapter 11 bankruptcy protection in the US while seeking additional funding, with CEO Peter Carlsson resigning shortly after. https://t.co/dGUOJf3cDH
— Brussels Signal (@brusselssignal) November 22, 2024
The company said that it is important to understand that this reporting was not representative of a typical month because of the organisation efforts.
A write-down in the context of Chapter 11 bankruptcy refers to the reduction of an asset’s recorded value. This practice is commonly employed during restructuring to more accurately reflect an asset’s current market value, which often diminishes significantly during financial distress.
Companies typically implement write-downs with the intention of continuing their business operations rather than closing down. Chapter 11 bankruptcy specifically enables businesses to reorganise their debts and assets under court supervision, allowing them to work toward financial recovery while maintaining operations.
According to Swedish media, Northvolt’s attempts to secure new financing are increasingly pointing towards a rescue from Asia.
The company received lavish support from the EU due to its green promises.
Northvolt uses old Chinese technology, with 20-year-old equipment that was already out of date when put in place.
A report by Swedish economic researcher Jonas Grafström has criticised the EU’s industrial policy, citing Northvolt’s collapse as evidence of flawed taxpayer-funded investments. https://t.co/t1NwtBwJEd
— Brussels Signal (@brusselssignal) December 11, 2024
