Battery unicorn Northvolt files for bankruptcy, co-founder and CEO resigns

Beleaguered Swedish battery manufacturer Northvolt announced on Thursday that it was filing for bankruptcy in the U.S., striking a blow to Europe’s ambitions for homegrown lithium-ion batteries.

The company reportedly chose Chapter 11 in an effort to right its finances. In the wake of the filing, co-founder and CEO Peter Carlsson resigned, though he’ll remain on as an advisor and a member of the board.

“Today marks a significant new phase for Northvolt as well as for me personally,” Carlsson said in a statement. “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, which had soared for years on the back of strong fundraising and a string of announcements about new facilities, has stumbled of late. It laid off 1,600 employees, about 20% of its workforce, in September, and unloaded assets in November from its ill-fated purchase of Bay Area battery startup Cuberg.

The company has raised $14.26 billion, according to PitchBook, including a $1.2 billion round in 2023 to expand operations in North America. But that wasn’t enough to keep the cash-starved operation going. The company reportedly was burning through $100 million per month. When BMW pulled out of a $2 billion contract in June after Northvolt failed to deliver on time, bankruptcy became almost inevitable.

This isn’t the first time a battery manufacturing startup hit a rough patch — A123 Systems’ failure over a decade ago stands out as a prominent example in the U.S. — and it likely won’t be the last. Making lithium-ion cells is fiendishly difficult, requiring deep knowledge of chemistry, production equipment, and quality improvement. Even leading companies suffer from costly problems, sometimes to the tune of $1 billion. Northvolt’s bankruptcy is probably more a sign of poor execution than softer-than-expected demand for EVs.

Is this the end for the Swedish company? Not necessarily. For one, Volkswagen owns part of the company, and it has placed a big bet on EVs, for which it’ll need millions of cells. Plus, Europe, like other advanced economies, has been rushing to stake a claim in the battery manufacturing space, and Northvolt seemed like its best chance to compete with Asian rivals. It may still be, perhaps with the help of one of those rivals through some kind of partnership, but first it has to get its house in order.

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