STOCKHOLM

Swedish battery manufacturer Northvolt AB has been exploring the possibility of filing for bankruptcy protection in the United States, according to multiple sources familiar with the matter.

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The Stockholm-based company, which has attracted approximately EUR 10 billion (USD 10.57 billion) in funding since its founding in 2016, has transformed from being Europe's most promising domestic EV battery manufacturer to a company grappling with severe financial challenges. The consideration of Chapter 11 proceedings comes as part of a broader strategic review initiated in July 2023, as the company faces mounting pressures from production setbacks and the loss of a key customer.

Sources close to the situation, speaking on condition of anonymity due to the sensitive nature of the discussions, revealed that while bankruptcy protection is being considered, it represents just one of several options being evaluated by the company's management. The news comes as Swedish business publication Dagens Industri reported that negotiations between Northvolt and its stakeholders regarding short-term financing had initially stalled, though recent developments suggest these talks have resumed despite growing complications in recent weeks.

Northvolt's current predicament marks a dramatic shift in fortunes for a company once heralded as Europe's answer to Asian dominance in the EV battery market. The manufacturer has been forced to implement significant cost-cutting measures and operational streamlining in response to its financial difficulties. These challenges have emerged despite the company's impressive funding history, which has included investments from major automotive manufacturers and financial institutions.

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When approached for comment, a Northvolt spokesperson declined to specifically address the Chapter 11 considerations but acknowledged the ongoing strategic review process. "Since the beginning of the strategic review, we have constantly been discussing different options and that hasn't changed throughout the process," the spokesperson stated. "We communicate results once we have found a conclusion, while we continue the dialogue with our stakeholders."

The potential consideration of Chapter 11 proceedings under U.S. bankruptcy law is particularly notable given Northvolt's status as a European company. Such a move would allow the company to reorganise its operations while maintaining control of its business operations, potentially providing a path forward while protecting it from creditors.

Industry analysts suggest that Northvolt's struggles highlight the broader challenges facing European efforts to establish a competitive domestic battery manufacturing industry. The company's situation reflects the significant capital requirements, technical challenges, and competitive pressures in the global EV battery market, where established Asian manufacturers maintain a significant advantage.

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The outcome of Northvolt's strategic review and potential restructuring efforts could have significant implications for Europe's ambitious plans to develop a self-sufficient EV battery supply chain, a key component of the continent's broader transition to electric mobility and its climate goals.