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A subsidiary of troubled Swedish battery maker Northvolt has filed for bankruptcy as one of Europe’s flagship green projects tries to stay afloat.
Northvolt Ett Expansion, a subsidiary with no employees, was meant to support the buildout of the company’s sub-Arctic battery factory but has now applied for a court-appointed trustee after the project was scrapped.
“We regret having to file this application. It is important to say that the closure of Ett Expansion AB was a very difficult decision for its directors,” two Northvolt executives wrote in a letter to suppliers on Tuesday morning.
The move is part of the lossmaking company’s desperate attempt to stave off financial collapse by shuttering large parts of the business that was pitched as Europe’s fightback against Asian dominance of the battery industry.
The Swedish industrial start-up, which is trying to raise fresh capital despite having already secured $15bn in funding, is focusing its attention on the already-built first phase of its factory in Skellefteå in northern Sweden.
It has stopped working on developing active material for batteries as well as recycling and is seeking buyers for its energy storage business. It is cutting a quarter of jobs in Sweden — 1,600 jobs — and has closed down its research and development facility in the US, while executives hint future factories in Canada, Germany and Sweden are likely to be delayed.
Northvolt downplayed the decision to file for bankruptcy of Ett Expansion at Stockholm’s district court on Tuesday morning. It said it did not affect any of the other 20 entities within the Northvolt Group, and that it remained focused on scaling up production in Skellefteå.
Its factory there has an annual capacity of 16 gigawatt hours, but Northvolt last year manufactured significantly less than 1GWh as it struggled with a production stop following the death of a worker. Swedish environmental prosecutors said last month that Northvolt would be imminently served with suspicion of gross manslaughter over the death.
Northvolt was plunged into crisis after German carmaker BMW, a shareholder in the Swedish group, pulled a $2bn contract and instead gave it to a Korean supplier.
It originally planned to expand Skellefteå to 60GWh — 1GWh provides enough batteries for about 17,000 cars — but cancelled that in late September.
Peter Carlsson, Northvolt’s chief executive, told the Financial Times in July that it was aiming to reach production levels equivalent to 1GWh annually by the end of this year, make “a handful” of GWh in 2025, and hit profitability in 2026.
But Northvolt is struggling to convince shareholders to back its latest fundraising while the Swedish government has ruled out a state rescue of the group.