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The write downs occurred throughout the current fiscal year as the situation at Northvolt deteriorated.
© 2024 TechCrunch. All rights reserved. For personal use only.
JONATHAN NACKSTRAND/AFP/Getty Images
Northvolt, the battery company founded by two former Tesla executives, has filed for Chapter 11 bankruptcy protection after struggling to ramp up production.
Sweden-based Northvolt said on Thursday that it voluntarily entered bankruptcy proceedings in the US, which will allow it to restructure debt and obtain new investment.
Soon after the bankruptcy was announced, CEO Peter Carlsson, one of Northvolt's founders, said he would step down as part of the process.
Bankruptcy documents showed Northvolt had about $5.8 billion of debt, and just $30 million in available cash — enough to fund its operations for about seven days.
Goldman Sachs, JPMorgan, and Microsoft were all listed as creditors in bankruptcy documents. It had raised more than $15 billion since its foundation in 2016.
Northvolt said it has secured extra funding of about $245 million, including $145 million in cash, and a $100 million commitment from a customer to provide a debtor-in-possession loan — a specialized credit line for firms going through bankruptcy.
"This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production," said Tom Johnstone, Northvolt's interim chair, in a statement.
"Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification."
Northvolt will continue operating during the bankruptcy proceedings.
Founded in 2016 by Carlsson and Paolo Cerutti, Northvolt aimed to revolutionize battery manufacturing but has struggled in recent months.
The firm's bankruptcy comes after difficulties in ramping up battery production at its facility in Skellefteå, Sweden, close to the Arctic Circle. In June, BMW pulled out of a $2.1 billion order for battery cells for its EVs, citing delays to deliveries.
In September, Northvolt said it would lay off about 1,600 staff.
Automakers in Europe are struggling with weak demand for EVs and rising competition from Chinese rivals.
On Wednesday, Ford said it would cut 4,000 jobs in Europe by the end of 2027.
Volkswagen, Europe's largest car company, is considering the closure of factories in Germany for the first time and cutting tens of thousands of jobs. VW faces stuttering demand in Europe and has lost market share in China to local rivals selling cheaper EVs and hybrids.
The company chose Chapter 11 in an effort to right its listing finances.
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