Sam Meredith’s Post

Northvolt, the Swedish battery manufacturer once hailed as Europe's champion in the EV battery sector, filed for Chapter 11 bankruptcy protection in the United States on November 21, 2024. This development highlights the fallacy of private market valuations and the challenges faced by companies in the EV battery industry. Bankruptcy Details: Northvolt filed for bankruptcy with only $30 million in cash reserves, enough for about a week of operations, against $5.84 billion in debt. The company will gain access to approximately $245 million in new financing through the bankruptcy process. Operations are expected to continue as usual during the reorganization, with the company meeting obligations to customers, vendors, and employees. Factors Contributing to Bankruptcy: Market Challenges: Stagnating demand for battery-powered vehicles in Europe, with growth slowing to 13% in 2024. Competition: Chinese companies like CATL and BYD have thrived, benefiting from robust EV sales in China. Operational Issues: Incidents at a Swedish facility and the loss of a significant contract with BMW worth €2 billion in June 2024. Private Market Valuation Fallacy Northvolt's bankruptcy underscores the disconnect between private market valuations and financial reality: In January 2024, Northvolt secured a $5 billion financing package from the European Union. The company was previously valued at $12 billion in a 2022 funding round. Despite high valuations, Northvolt reported a loss of $1.2 billion in 2023, up from $285 million in 2022. This case demonstrates how private market valuations can be inflated and disconnected from a company's actual financial health and market conditions. #Northvolt #EuropeanVCs

European EV Battery Champion Northvolt Files for Bankruptcy Amid Cash Crisis Swedish EV battery manufacturer Northvolt has filed for Chapter 11 bankruptcy protection in the US, with only enough cash to keep operations running for about a week, according to Reuters. Financial Struggles Hit Hard The company, which produces battery cells for electric vehicles, is facing a severe liquidity crisis with just $30 million in cash against $5.8 billion in debt. They’ve secured $100 million in new financing to support the bankruptcy process, with Swedish truck maker Scania offering an additional $100 million loan specifically for their Skellefteå manufacturing facility. Impact on European EV Industry This development is a significant setback […] by Haye Kesteloo #ev #BYD #China #Europe #Make #SEC #Tesla

Swedish battery developer and manufacturer #Northvolt has filed for bankruptcy protection in the #UnitedStates, in a move that was followed a day later by the resignation of the company’s founder CEO, former senior #Tesla executive Peter Carlsson. It’s a significant move because Northvolt was one of the brightest hopes for Western electric carmakers that were looking to reduce their reliance on #China battery giants. The company raised more than $10 billion, but was unable to land long term contracts with major car makers or compete with #Chinese competitors. Northvolt makes a range of battery products including #lithium-ion and #sodium-ion cells, electric vehicle (#EV) battery cells, and batteries for standalone storage. Last year it hailed a breakthrough in sodium-ion batteries, which the company said would enable the expansion of cost-efficient and sustainable #energystorage systems around the globe. Its filing for Chapter 11 is designed to facilitate approximately $US145 million in cash collateral and a further $US100 million debtor-in-possession financing, which would be added to a $US100 million promised late last week by #Swedish truck maker #Scania, a shareholder and Northvolt’s biggest customer. Tom Johnstone, the interim chairman of the board, said the company is not giving up on its hopes to play a key role in the transition to electric vehicles. “Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification,” he said in a statement. “We are likewise pleased by the strong support we have received from our existing lenders and our customers.” Northvolt, with operations in #California, reportedly has only $US30 million in cash, enough only to support operations for around a week. The company also has debts worth $US5.8 billion. Carlsson, who was a former Tesla executive and co-founded Northvolt in 2016, will stay on as a member of the board and senior advisor. “Today marks a significant new phase for Northvolt as well as for me personally,” said Carlsson in a statement. In remarks to reporters, Carlsson described the financing situation “incredibly complicated” and that the company needs to raise around $US1.2 billion to get back on track.

Northvolt, the Swedish EV battery manufacturer, recently filed for Chapter 11 bankruptcy in the U.S., citing over-expansion and fierce competition from Chinese battery makers. Despite raising over $13.8 billion in equity and public funding since its founding in 2016, the company was burdened with $5.8 billion in debt and only $30 million in cash at the time of filing. Key setbacks included the loss of a $2.1 billion contract with BMW and slower-than-expected demand for electric vehicles in Europe. Northvolt hopes to restructure and secure additional funding by early 2025 to continue operations. The bankruptcy has significant implications for Europe's ambitions to reduce dependency on Chinese battery manufacturers, who dominate 85% of global production. European governments are now emphasizing strategic initiatives to boost local production and diversify raw material sources. Volkswagen, a major investor in Northvolt, has already written down much of its stake, further complicating the outlook for European EV manufacturing. https://lnkd.in/d6DUz3uv

Obviously, this was already some big news I wanted to share but didn't want to distract from our COP29 reporting we did over the last week at NovAzure. Hence the posting just now... Northvolt is the last recent story of how the EU has been struggling on getting a key anchor stone onto the map for own battery production. Obviously there is a strong connecting point with the EV OEM storyline across Europe having missed a trick of offering affordable EVs to a very price sensitive market. Without the massive off-take outlooks from BMW (and with VW struggling themselves... wanting to close down plants in Germany) in the EV sector it's no wonder that earmarked key suppliers such as Northvolt feel the hit. Again, this is quite cyclical.... hopefully investors & consumers will go much more "bullish" into the market for 2025. Or is it too late...? Any thoughts?

Narratives crush rising tides. Stick to facts, you’ll do better. “Despite raising $13.8 billion in funding, the company generated only $128 million in revenue in 2023” “Reasons For Failure: Weak Market Demand: Despite the global EV push, demand for electric vehicles in Europe has softened, leaving automakers with excess inventory and scaled-back ambitions. Some automakers, delayed or downsized electrification projects, directly impacting Northvolt’s revenue pipeline. Operational Challenges: Scaling production is notoriously difficult, particularly in an industry as capital-intensive as battery manufacturing. Northvolt struggled to meet delivery timelines, losing a $2B contract with BMW in June after delays earlier in the year. Leadership Missteps: Northvolt tried to scale too quickly, taking on ambitious projects (like their green gigafactory) without ensuring its core operations were running smoothly. Former CEO Peter Carlsson admitted, “I should have probably pulled the brake earlier on some of the expansion paths in order to make sure that the core engine was moving according to plan.”. Financial Mismanagement: Northvolt's financial health deteriorated sharply, with net losses escalating from $285 million in 2022 to approximately $1.2 billion in 2023. #getoutside

Northvolt’s bankruptcy signals a wake-up call for Europe’s battery ambitions. Despite substantial funding and bold expansion plans, Northvolt has filed for bankruptcy protection. This isn’t just a company in crisis—it’s a symptom of broader challenges in Europe’s efforts to establish a competitive battery manufacturing sector. Here are 4 key lessons from Northvolt’s story: 1️⃣ Market Volatility: A slowdown in electric vehicle (#EV) demand, driven by inflation and wavering consumer confidence, created turbulence for Northvolt. Reduced EV sales, especially in major markets like Germany, disrupted its growth model. 2️⃣ Competitive Pricing: Cheaper EVs from China, built with cost-efficient Chinese batteries, intensified the pressure. Competing on price and scale has become an uphill battle for European firms. 3️⃣ Operational Gaps: Mismanagement and operational setbacks played a significant role. Dr. Andy Palmer CMG, FREng, former Aston Martin chief executive, puts it bluntly: “The biggest issue is that batteries are not easy to make, and Northvolt haven’t satisfied the supply demands of their customers – that is a management issue.” 4️⃣ Inconsistent Support: Even with significant funding, inconsistent government and corporate investments compounded its struggles, especially as it scaled back its expansion plans. James Frith, Europe head at investment firm Volta Energy Technologies, notes: “Europe needs to rethink how it supports a nascent sector before China eats up the entire value chain.” 🛑 The implications? If Northvolt cannot be revived, Europe risks ceding what little progress it has made against China in developing its own battery supply chain. Simon Moores, CEO of Benchmark Mineral Intelligence, warns: “The pendulum of industrial battery power has just swung east towards China.” While EV demand may have stalled temporarily, the mandates to sell more green cars mean demand for batteries will grow. If Europe’s batteries are not made locally, the bloc will be dangerously exposed to Chinese dominance. 💡 What’s next for Europe? • Double down on local innovation. • Strengthen investment strategies for high-growth industries. • Cultivate in-house expertise to reduce reliance on foreign tech. Northvolt’s restructuring journey will be pivotal in shaping the future of Europe’s battery sector—and its ability to compete globally. 🌍 What do you think Europe should do to r eclaim its position in the green energy race? P.S. If this post resonated, let’s discuss below or feel free to share it with your network. #Batteries #EVs #GigaFactories #ElectricVehicles

Northvolt’s bankruptcy filing serves as a stark warning for Europe’s EV ambitions and its efforts to reduce reliance on non-European battery suppliers. As Europe’s flagship battery manufacturer, Northvolt’s challenges—stemming from production delays, missed targets, and significant customer losses—highlight systemic barriers to scaling battery production in the region. Recent developments had already signaled trouble. Northvolt failed to meet its 16 GWh production goal for 2025, delayed deliveries that caused a six-month setback for Scania’s battery assembly plant, and lost a €2 billion supply deal with BMW due to production delays. These setbacks underscore critical issues: fierce global competition, slower-than-expected EV adoption, and substantial capital demands. This blow risks increasing Europe’s dependency on Chinese suppliers like CATL and BYD, complicating the transition to a resilient, homegrown supply chain. While the restructuring process offers Northvolt a chance to stabilize, it also underscores the urgent need for Europe to address structural weaknesses in its EV supply chain. Strengthened funding mechanisms, supportive industrial policies, and accelerated market growth will be essential to building a resilient, homegrown battery industry capable of competing on the global stage. The stakes have never been higher. https://lnkd.in/dpZhYRUs #EVSupplyChain #EVBatteries #European_EV_Industry #ElectricVehicles #Northvolt

The latest buzz about northvolt proves that it doesnt matter who starts first.  It matters who manages to build a sustainable value for the all stakeholders.   $10bn in financing, major Investors from EU and government.  So what really went wrong with the battery makers. Apart from the challenges with production, cancelled orders with majors like BMW. Financial challenges: Northvolt has been burning through $100 million per month. What led the downfall is the commitment of producing more than the fair share of resources.  https://lnkd.in/d74hEerf

Northvolt, a leading European battery manufacturer, exemplifies the challenges faced by the EV battery industry. The rapid expansion of the EV market created a surge in battery production capacity, but as growth slows, overcapacity and reduced demand have emerged. Northvolt’s missed deadlines and quality issues led to losing key contracts, like a $2 billion deal with BMW Group https://lnkd.in/daww-WBN Fierce competition from Chinese manufacturers, benefiting from economies of scale and subsidies, has driven global oversupply and price drops, pressuring European players https://lnkd.in/d3YxeqSW Additionally, technological and quality challenges in scaling production have further hindered Northvolt’s progress, highlighting the complex dynamics of this competitive industry https://lnkd.in/dtwcEFSv #northvolt #evbatteries #marketsaturation #intensecompetition #technologicalchallenges #evmarket #batterymanufacturing #globalcompetition #batteryquality #evindustry