Northvolt files for bankruptcy, leaving Europe's EV battery hopes in doubt

"The company will continue to make deliveries to customers, while fulfilling obligations to critical vendors and payment of wages to employees," according to a statement from Northvolt.

Northvolt filed for bankruptcy in the U.S. under Chapter 11 of the U.S. Bankruptcy Code, which allows the company to reorganize its finances and submit a realistic plan to pay creditors under court supervision. If the company fails to do so within the allotted time, liquidation proceedings will begin.

Northvolt had approximately $30 million in available cash and $5.84 billion in debt, according to the statement. Bloomberg data indicates that Northvolt is one of the most indebted companies to file for bankruptcy in the United States this year.

During the court process, Northvolt will have access to a cash collateral of about $145 million. Scania CV AB, a Volkswagen AG subsidiary focusing on truck manufacturing and a key Northvolt client, separately informed Bloomberg that it would provide $100 million as debtor-in-possession financing.

Northvolt employs approximately 6,600 people across seven countries. The company expects to complete its restructuring in the first quarter of 2025.

Subsidiaries of Northvolt responsible for constructing planned factories in Germany and Canada remain outside the Chapter 11 process, although the company stated that these projects would be delayed.

As Reuters notes, Northvolt transformed from Europe's best hope to compete with Chinese battery makers for electric vehicles to a company struggling to make ends meet in just a few months.

China controls 85% of the global production of batteries for electric vehicles.