“First and foremost, this was necessary to leverage and drive the company forward,” Carlsson said. “Essentially, Northvolt is crucial both for our customers and for Europe’s green transition. The recapitalization allows us to exit this process with a simpler capital structure.”

Northvolt’s downward spiral began in the summer when BMW canceled a €2 billion contract. The next blows came quickly, with Volvo saying it would take over the joint venture with Northvolt as soon as it found an investment partner.

In September, Northvolt announced laid off 1,600 people, or a quarter of its Swedish workforce, and suspended its gigafactory expansion project.

But the biggest setback came from Volkswagen, which is Northvolt’s largest investor and owns 21% of the company. Facing the German car manufacturer a financial crisis own, with slowing sales in China and negotiations with union workers over layoffs and possible factory closings.

Despite the Chapter 11 filing, the company’s flagship gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, Sweden, will remain operational. Northvolt Germany and Northvolt North America will also continue to operate, with the company saying a $7 billion plant planned for Quebec is still on track.

“There are many questions about the speed of the ecological transition and the role of Europe. It is essential that we continue to move forward,” said Carlsson. “We will regret it in 20 years if we don’t accelerate the transition and create a strong European market with strong European champions.”