COPENHAGEN: Northvolt CEO and co-founder Peter Carlsson resigned on Friday, a day after Europe’s best hope for an electric vehicle battery champion filed for bankruptcy protection in US Chapter 11.

The Swedish battery cell maker went in a few months this year from being Europe’s best chance in an industry vital to the energy transition to racing to stay afloat, bogged down by production problems and funds in decrease

Its collapse deals a major blow to Europe’s hopes of reducing its auto industry’s reliance on Chinese battery suppliers such as CATL and BYD.

The company, whose motto is “make oil history,” has received more than $10 billion in equity, debt and public funding since its launch in 2016 and counts Volkswagen and Goldman Sachs, each with about a fifth stake. as the main owners. .

It now needs to raise $1 billion to $1.2 billion to rebuild its business, the outgoing president said.

“Personally, this is an emotional day,” Carlsson said. The former Tesla executive said Northvolt was “like a child” to him.

The company opted for a court-led restructuring after talks with investors and creditors, including Volkswagen and Goldman, broke down and its funds were running dry.

Filing for Chapter 11 allows a period in which the company can reorganize and step up operations, meet commitments to customers and suppliers, and ultimately position itself for the long term, Carlsson said.

The company had just $30 million in cash at the time of the filing, enough to sustain it for a week, while its debts totaled $5.8 billion, including $313 million owed to the European Investment Bank ( EIB) and a $154 million loan from shareholders. .

It was far too early to say what the outcome of the Chapter 11 process would be, EIB Vice President Tomas Ostros said.

“For us… it remains the case that Europe has a strategic interest in a European battery industry for electric cars and we will be watching developments very closely,” he added.

The lithium-ion battery maker also secured $100 million in new bankruptcy financing from another shareholder and top customer Scania to allow it to continue operating and said it would seek more money.

Northvolt, which has about 6,600 employees in seven countries, said in its Chapter 11 filing that it expects to complete the restructuring by the first quarter of 2025.

Company sources, who declined to be named because they are not authorized to speak to the media, said Northvolt’s problems ramping up production stemmed from machine breakdowns, inexperienced staff and unrealistic ambitions.

“In hindsight, we were too ambitious about when we could achieve this,” Carlsson said of the production goal, adding that the company is working to improve production.

On Monday, Reuters reported that Northvolt missed some domestic targets and cut production at its battery plant in northern Sweden.

Carlsson will become a senior adviser and remain a member of the board, the company said, adding that a search for a new CEO has begun. In the meantime, it will be led by finance chief Pia Aaltonen-Forsell and its battery cell president Matthias Arleth, who takes on a new role as chief operating officer.

NOT EASY TO DO

“The biggest problem is that batteries are not easy to make and Northvolt has not met the supply requirements of their customers – this is a management problem,” said Andy Palmer, founder of consultancy Palmer Automotive.

Europe has sought to lure electric vehicle battery makers to the region – home to Volkswagen and Stellantis – to reduce dependence on Asia and win a green subsidy race with the United States.

Production plans, however, have been stymied by red tape, technical issues and slower-than-expected demand for electric vehicles.

In 2024, battery capacity in Europe by 2030 is down 176 gigawatt-hours, according to data firm Benchmark Minerals. That’s equivalent to almost all of Europe’s current installed capacity, according to Reuters calculations.

Only one production line at the Northvolt plant in northern Sweden, its only operating battery unit, currently delivers finished products to an end user, truck maker Scania, Carlsson told reporters.

Work is underway on two more production lines at the plant to enable deliveries to Porsche and Audi, he added.

Northvolt said Thursday it is seeking one or more partners to finance its restructuring and return the company to long-term sustainability, including the completion of major battery plants in Germany and Canada.

“All interested parties, regardless of their desired transaction type, are encouraged to contact Rothschild as soon as possible and submit proposals by early December,” Northvolt said in a Chapter 11 filing in a court in Texas.

Otherwise, Northvolt said it has hired financial services company Hilco Global to help with “an orderly liquidation process, if necessary.”