Northvolt CEO Resigns After Company Files for Bankruptcy

Swedish battery maker Northvolt dealt a setback to Europe’s lithium-ion battery ambitions by announcing its bankruptcy filing in the United States on Thursday

The organization reportedly chose Chapter 11 as a way to improve its financial situation. Co-founder and CEO Peter Carlsson resigned in response to the filing; however, he will continue to serve as an advisor and board member.

“Today represents a monumental transition for Northvolt and for me personally,” Carlsson declared in a statement. “The Chapter 11 filing enables the company to reorganize, increase operations while adhering to customer and supplier obligations, and ultimately establish itself for the long term.” This presents an advantageous opportunity for me to transfer my responsibilities to the subsequent generation of leaders.

Northvolt, which had seen significant growth in recent years as a result of robust fundraising and a series of pronouncements regarding new facilities, has experienced a recent stumble. In September, it terminated 1,600 employees, which accounted for approximately 20% of its workforce. In November, it liquidated assets associated with its unsuccessful acquisition of Bay Area battery startup Cuberg.

The company has raised $14.26 billion, according to PitchBook, with a $1.2 billion round in 2023 to expand operations in North America. However, this was insufficient to sustain the cash-strapped operation. According to reports, the organization was incurring expenses of $100 million on a monthly basis. Bankruptcy was nearly inevitable when BMW withdrew from a $2 billion contract in June due to Northvolt’s failure to meet deadlines.

This is not the first instance of a battery manufacturing venture experiencing a difficult period; A123 Systems’ failure over a decade ago is a notable example in the United States. However, it is unlikely that this will be the last. The process of fabricating lithium-ion cells is exceedingly challenging, necessitating a profound understanding of chemistry, production apparatus, and quality enhancement

Even the most prominent organizations encounter costly issues, occasionally exceeding $1 billion. Northvolt’s bankruptcy is likely more indicative of inadequate execution than of lower-than-anticipated demand for electric vehicles.

Is this the end of the Swedish company? Not necessarily. Firstly, Volkswagen owns a portion of the company and has made significant investments in electric vehicles (EVs), which require millions of cells. Additionally, Europe, like other sophisticated economies, has been eager to establish a presence in the battery manufacturing sector, with Northvolt appearing to present the most promising opportunity to compete with Asian competitors. It may still be possible with a partnership from a competitor, but it must first organize.