Shareholders throw Northvolt a lifeline

Beleaguered Swedish battery manufacturer Northvolt has received a critical endorsement from its shareholders to continue operations in its home country. A vote in favor underscores shareholder confidence from important partners like Volkswagen as the battery supplier tries to restructure and seeks additional funding to keep its business afloat.

Northvolt, once a beacon of Europe’s aspirations for a homegrown battery supply chain to rival Chinese dominance, has faced mounting pressures in recent months. After filing for Chapter 11 bankruptcy protection in the US last November, the company revealed debts amounting to 58.2 billion euros. The bankruptcy proceedings are aimed at shielding the company from creditors.

CEO ousted

Amid this financial turmoil, Northvolt announced that it would cut 1,600 jobs – nearly a quarter of its workforce in Sweden – as part of a broader cost-cutting strategy. The company has since received 237 million euros in bankruptcy financing to sustain operations, particularly at its flagship battery factory in Skellefteå, located above the Arctic Circle.

The crisis soared to the firm’s top as co-founder Peter Carlsson stepped down as CEO during the financial crisis. Northvolt’s workforce reductions followed significant setbacks, including BMW’s decision to cancel a €2 billion battery order and reduced demand from Volkswagen, another key client.

Shareholder support

At an extraordinary general meeting in Stockholm, shareholders, including Volkswagen Group and investment bank Goldman Sachs, voted overwhelmingly to support continued production in Sweden. While this approval was a legal formality under Swedish law – triggered when a company’s equity falls below half its registered capital – it carries significant weight for Northvolt’s restructuring plans.

“This positive vote highlights the broad support shareholders have for Northvolt’s current course of action,” said a company spokesperson. Talks with potential investors are ongoing as Northvolt seeks the necessary cash injections to exit bankruptcy protection by the end of the first quarter of 2025.

Scaling back ambitions

Northvolt has revised its original vision of building an entirely European battery supply chain, focusing exclusively on manufacturing battery cells. Plans for additional facilities have been shelved, and diversification efforts, such as precursor materials and recycling, have been scaled back.

However, the company remains committed to its most important strategic projects outside Sweden, including a battery plant in Heide, Germany, which it describes as a cornerstone of its long-term plans.

Meanwhile, Northvolt is exploring potential collaborations with Asian battery makers, like CATL, to address its current crisis. But as US Defense has blacklisted the latter as a danger for espionage, co-ownership has become more complex as it could block a smooth entry into the North-American market.