Sweden’s Northvolt AB — which was Europe’s best-funded start-up — said on Friday its CEO and co-founder Peter Carlsson is stepping down as the battery maker embarks on a restructuring under bankruptcy protection.
Carlsson raised billions of dollars in debt and equity with an ambition to be a European electric vehicle battery champion.
Northvolt has raised more than $15 billion in equity, debt and public financing since its 2016 startup, with Volkswagen and Goldman Sachs among its biggest shareholders. Edinburgh-based Baillie Gifford has also been a big investor in Northvolt.
But the Swedish company filed for Chapter 11 bankruptcy protection in the US on Thursday with about $5.8 billion in debts, after a bid to find rescue funding fell short, leaving the battery maker with just $30 million — about one week’s cash.
Northvolt secured more than $50 billion in orders from companies including BMW, Volkswagen, Scania and Porsche, but failed to speed up production quickly enough.
Carlsson told reporters Northvolt now needs to raise between $1 billion and $1.2 billion to restore its business.
“Personally this is an emotional day … ” said the former Tesla executive, adding that Northvolt had been “like a baby” to him.
The company is currently delivering batteries from its first gigafactory, Northvolt Ett, in Skellefteå, Sweden and from its R&D and industrialization campus, Northvolt Labs, in Västerås, Sweden.
On Friday, Northvolt said: “Chapter 11 provides the company with the financing to focus on operational improvements and supporting customers, while allowing for restructuring, reorganization, and fundraising to secure a long-term competitive positioning.
“The company is also announcing that Peter Carlsson will take on a role as Senior Advisor and step aside from his role as CEO. He also remains a Member of the Board.
“Peter Carlsson has led Northvolt since its inception in 2016. He co-founded Northvolt with the mission to drive sustainable energy solutions through the creation of a pioneer in European battery production.
“Northvolt Ett is the first truly European battery gigafactory delivering to customers at large scale. Northvolt Labs is the epicenter of European battery research and development, achieving technical breakthroughs and leading in patent creation.
“In parallel, Northvolt is building groundbreaking facilities in Heide, Germany and Montreal, Canada, catering for a completely new industry in the Western economies.”
Carlsson said: “Today marks a significant new phase for Northvolt as well as for me personally. The Chapter 11 filing allows a period during which the company can be reorganized, ramp up operations while honoring customer and supplier commitments, and ultimately position itself for the long-term. That makes it a good time for me to hand over to the next generation of leaders.”
Northvolt’s Interim Chairman Tom Johnstone said: “We are incredibly thankful to Peter for his vision and dedication to building Northvolt from an unprecedented idea to becoming Europe’s battery manufacturing champion. Peter’s perspective will continue to benefit Northvolt, as a Senior Advisor and Member of the Board, while the new leadership will steer the company into the next stage.”
Northvolt’s leadership will now consist of Chief Financial Officer Pia Aaltonen-Forsell, and Matthias Arleth, the President of Cells, who will take the role of Chief Operations Officer. Together, and supported by Scott Millar as Chief Restructuring Officer, they will jointly lead Northvolt.
The search for a new CEO has been initiated.
Johnstone added: “I am very pleased that the two recent additions to Northvolt’s leadership will jointly lead this next phase of operational improvement, increased customer focus, and financial restructuring.”
On its bankruptcy filing on Thursday, Northvolt said: “By enabling the company to restructure its debt, appropriately scale the business to current customer needs and secure a sustainable foundation for continued operation, these Chapter 11 filings will help Northvolt to implement the decisions made as part of its strategic review to rescope the business and prioritize commitments to customers.
“Northvolt will continue to operate as usual during the reorganization, similar to other international companies that have used the Chapter 11 process to reorganize their financial obligations.
“The company will continue to make deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees. The Chapter 11 restructuring process in the U.S. is distinct from a bankruptcy or administration proceeding in Sweden or many other countries.
“Importantly, this process will allow Northvolt to access new sources of funding, including approximately $145 million in cash collateral.
“In addition, one of Northvolt’s existing customers has committed to provide $100 million in new financing to support Northvolt’s business operations in the form of debtor-in-possession (DIP) financing, which is a specialized type of financing for businesses that are restructuring through a Chapter 11 process.
“Northvolt Ett, the company’s flagship battery gigafactory in Skellefteå, Sweden, and Northvolt Labs in Västerås, Sweden will remain operational as Northvolt ramps up production to meet commitments to its customers.
“Northvolt Germany and Northvolt North America, subsidiaries of Northvolt AB with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt’s strategic positioning.”
Johnstone said: “This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production. Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification. We are likewise pleased by the strong support we have received from our existing lenders and our customers.”
Northvolt said that as part of the restructuring process, which is anticipated to be completed in the first quarter of 2025, Northvolt will evaluate proposals for new money investment. This process will include engagements with both strategic and financial investors, as well as existing lenders, shareholders and customers.
The Chapter 11 filings have been made in the U.S. Bankruptcy Court for the Southern District of Texas. As is customary in Chapter 11 proceedings, Northvolt has filed certain “first day” motions that will allow it to meet its obligations to employees, critical vendors and customers, as well as to continue making tax, insurance and utilities payments.
Northvolt “may take legal actions” in other jurisdictions to facilitate the U.S. Chapter 11 proceedings, which include entities in the US, Sweden and Poland.
Northvolt is being advised by Teneo as its restructuring and communications advisor. Kirkland & Ellis LLP, A&O Shearman and Mannheimer Swartling Advokatbyrå AB are serving as legal counsel. The company has also engaged Rothschild & Co to run its marketing process.