Northvolt CEO steps down after bankruptcy filing

The chief executive of Northvolt, Peter Carlsson, has quit just 24 hours after the Swedish battery maker filed for Chapter 11 bankruptcy protection in the United States, in a major blow to Europe’s electrification ambitions.

Carlsson, who co-founded Northvolt in 2016 and has run it since, will step aside immediately, the company said on Friday. He will remain on the board and act as a senior advisor while chief financial officer, Pia Aaltonen-Forsell, takes on the interim CEO role. She will oversee Northvolt’s operations, which include around 6,600 employees across seven countries.

Northvolt has been building a battery factory in Quebec with financial support of about $2.7 billion from the federal and provincial governments. Construction was interrupted earlier this year after a bomb scare.

The bankruptcy filing follows months of financial strain on Northvolt, until recently the poster child of Europe’s efforts to build an EV battery industry. 

Carlsson admitted the firm had only enough cash to sustain operations for one more week. He also said that while the Stockholm-based company secured a US$100-million financing package to support it through the bankruptcy process, it would need between US$1 billion and US$1.2 billion to stabilize its finances.

“Today marks a significant new phase for Northvolt as well as for me personally,” Carlsson admitted, adding the voluntary bankruptcy move will allow Northvolt to restructure its debt, scale back its business and secure a sustainable foundation for its continued operation.

He noted that Northvolt Ett, the company’s flagship battery gigafactory in north Sweden, as well as Northvolt Labs, will continue operating as usual during the restructuring process, which is expected to conclude in next year’s first quarter.

Rapid downfall

Northvolt was once heralded as a cornerstone of Europe’s push to rival Tesla and Chinese EV manufacturers in the burgeoning battery industry. The company produced lithium-ion, sodium-ion, and lithium-metal battery cells and secured significant contracts with major automakers, including Volkswagen.

The battery maker’s fortunes began to falter amid a decline in global demand for EVs earlier this year. Northvolt scrambled to implement cost-cutting measures, attract fresh investments, and apply for government grants, but these efforts fell short.

In 2022, the company created by two former Tesla executives unveiled plans to build a second gigafactory in Sweden, dubbed Northvolt Fem, which was initially intended to produce battery cells and active cathode materials. By 2023, the project was cancelled due to financial constraints. Efforts to take the company public also stalled, with plans for an initial public offering, originally targeted for 2023 or early 2024, shelved indefinitely.

Northvolt’s motto, “Make oil history,” captured the ambitious vision that propelled it to the forefront of Europe’s green energy movement. Yet, its inability to navigate the challenges of scaling production and sustaining financial health took a toll on its balance sheet.

Its financial troubles came into sharp focus in July, when it reported that its operating loss had more than tripled in 2022, reaching US$1 billion, while revenue saw only a modest increase to US$128 million.

The company’s difficulties escalated throughout the summer. In August, it closed its U.S. subsidiary Cuberg, and moved its research and development operations from California to Sweden.

A month later, it announced delays for planned battery plants in Canada and Germany, along with a global workforce reduction of 20% and a 25% cut in its Swedish staff.

Production challenges further compounded Northvolt’s problems. The company consistently struggled to meet its weekly battery cell production targets, which contributed to the loss of a US$2.1 billion supply contract with BMW in June.

Despite its setbacks, Northvolt has retained a significant presence in the EV battery market. Its cells are used by major automakers, including Porsche and Audi, and it recently developed a battery pack with a lifespan of 1.5 million km. for Scania electric trucks and tractors.