The filing comes after Northvolt’s prolonged financial struggles, which saw it seek Chapter 11 bankruptcy protection in the US late last year, followed by the abrupt departure of its CEO, Peter Carlsson. The company cited rising capital costs, geopolitical instability and supply chain disruptions as key reasons for its failure, in addition to internal production issues.

Founded in 2016 with the aim of challenging the dominance of Asian battery manufacturers, particularly China, Northvolt quickly became the European battery industry’s poster child. However, the company has struggled in recent years to compete against market subsidies in China and the US while simultaneously planning significant capacity expansions with a second plant in Sweden, and facilities in Germany and North America, while its core gigafactory in Skellefteå was only producing at 1% of its theoretical capacity at the time.

A major blow came in June 2023 when BMW cancelled a €2bn contract due to Northvolt’s failure to deliver promised battery cells, opting instead to work with South Korea’s Samsung. This loss, coupled with failed fundraising efforts and the Swedish government’s refusal to provide state support, ultimately led to the company’s downfall.

Bankruptcy proceedings and an uncertain future

Following this month’s bankruptcy filing, a Swedish court has appointed a trustee to oversee Northvolt’s business and asset sales while settling its outstanding debts. The process places the company’s 5,000 employees in an uncertain position, as potential buyers or restructuring plans remain unclear.

The bankruptcy primarily affects Northvolt AB and its Swedish subsidiaries. The company say its Northvolt Germany and Northvolt North America operations have not entered insolvency proceedings. However, the fate of these divisions remains uncertain, as any decisions regarding their future will be made by the court-appointed trustee in consultation with Northvolt’s creditors.

Tom Johnstone, Interim Chairman of Northvolt’s Board of Directors, expressed deep regret over the bankruptcy, acknowledging the company’s achievements despite its financial struggles. He said: ‘We set out to build something groundbreaking – to drive real change in the battery, EV and wider European industry, and accelerate the transition to a green and sustainable future.’ He continued: ‘For me, it remains key for Europe to have a homegrown battery industry, but it is a marathon to build such an industry. It needs patience and long-term commitment from all stakeholders.’

A broader EV battery industry crisis

Northvolt’s downfall is not an isolated case; several battery and EV companies have succumbed to financial difficulties in recent years. The sector has faced a combination of rising costs, shifting market dynamics and fierce international competition.

UK battery start-up Britishvolt collapsed into administration in January 2023 after struggling to turn a profit and running out of money. The firm had planned to build a gigafactory to make EV batteries in Blyth, Northumberland.
 

More recently, last month Nikola Corporation, a leading developer of zero-emission trucks, filed for Chapter 11 bankruptcy in the US. The company cited macroeconomic pressures and supply chain disruptions as key reasons for its collapse. Despite bringing the first commercially available Class 8 hydrogen fuel cell electric trucks to market in North America and developing a hydrogen refuelling network, Nikola was unable to secure sufficient funding to sustain operations.

Similarly, the UK arm of commercial EV manufacturer Arrival entered administration in early 2024 after failing to secure necessary investments. The company had previously attempted to cut costs and restructure operations, but these efforts were not enough to overcome challenging market conditions.

Volta Trucks, another major player in the EV industry, filed for bankruptcy in Sweden and administration in the UK in late 2023. The collapse of its battery supplier, Proterra, reportedly played a crucial role in its downfall, disrupting manufacturing plans and investor confidence. Volta Trucks had developed what it said was the world’s first purpose-built 16-tonne all-electric truck. It had reported ‘positive feedback’ during pilot programmes across Europe. However, the company ultimately could not raise the necessary capital to continue operations.