Northvolt, once a symbol of Europe’s electric car revolution, files for bankruptcy after burning through $10 billion in investor cash

Just last week, we covered the collapse of Northvolt after its CEO and co-founder, Peter Carlsson, stepped down following a Chapter 11 bankruptcy filing. Once viewed as the driving force behind Europe’s electric car revolution, the Swedish EV battery startup was left with $5.8 billion in debt after burning through billions in funding. New reports reveal that Northvolt’s financial troubles were far more severe than initially believed.

According to Bloomberg, Northvolt struggled to maintain financing as Germany’s car industry plunged deeper into a crisis fueled by an influx of low-cost Chinese EV imports over the past three years. The company’s downfall casts a shadow over Europe’s plans to reduce reliance on Chinese battery suppliers like CATL and BYD. Northvolt once aimed to play a pivotal role in Europe’s green energy goals, operating under the motto, “make oil history.”

The bankruptcy news is particularly surprising given recent efforts to secure cash injections. Just days before the filing, reports surfaced about a $9.5 million proposal from Swedish investors to meet immediate cash needs. This followed Northvolt’s earlier push to raise €200 million in short-term funding, which underscored its growing financial struggles.

Northvolt’s Collapse

For Northvolt AB, the path to collapse began in June when BMW AG canceled a multi-billion-dollar order. At the time, the move didn’t attract much attention, but it set off a chain of events that led to Northvolt filing for Chapter 11 bankruptcy less than six months later.

In addition to BMW, the startup also attracted significant backing from major players, including Goldman Sachs Asset Management, Denmark’s largest pension fund ATP, Baillie Gifford, and several Swedish entities. Volkswagen and BMW were also key partners, further underscoring the scale of the fallout from Northvolt’s downfall.

By late June, Volkswagen, holding a 23% stake in Northvolt, appeared ready to provide financial support. However, the automaker soon found itself grappling with its own crisis. Stagnant EV sales in Europe and a slowdown in its Chinese operations forced VW to announce factory closures in Germany, with tens of thousands of layoffs looming. Amid this turmoil, Volkswagen withdrew from a planned equity investment in August and scaled back its commitment to battery purchases from Northvolt.

Despite continued efforts to secure a $300 million bridge funding deal involving lenders, creditors, and customers, negotiations fell apart by October. On Friday, Northvolt’s CEO Peter Carlsson acknowledged that VW had decided not to provide further capital, effectively sealing Northvolt’s fate.

Adding to the financial strain, Northvolt’s debts include a $330 million convertible loan from Volkswagen, due in December 2025, as disclosed in the bankruptcy filing.

Northvolt, founded in 2016 by Peter Carlsson, a former Tesla executive, and Paolo Cerruti, a former Airbus manager, rose to prominence by producing lithium-ion batteries for EVs and energy storage. The company established high-profile partnerships with Volkswagen, BMW, and ABB, aiming to produce sustainable, high-quality batteries for the green energy transition. However, production delays and mounting costs pushed Northvolt into a financial freefall.

As revenue dropped, the company retrenched, cutting back expansion plans and slashing jobs. By the time its emergency measures failed, Northvolt had burned through $10 billion, leaving just $30 million in cash. The fallout has shaken investors, including Goldman Sachs, ATP, Baillie Gifford, and Swedish funds, some of whom now face massive write-downs. Goldman Sachs, for instance, is reportedly set to write off nearly $900 million by year-end—an abrupt reversal from the bank’s earlier projections of significant returns.

One investor told Bloomberg they were stunned by how quickly the startup exhausted its resources. Confidence in July turned into concern by early August, following a warning from one of Northvolt’s owners that the company could run out of cash by September. The scale of the delays and financial mismanagement was allegedly obscured by polished slide decks and financial models that failed to reflect the company’s dire position.

The bankruptcy filing has major implications for Europe’s green ambitions, which depend heavily on local battery manufacturing to compete with Chinese and South Korean rivals. Northvolt had been a flagship project for the continent, and its collapse raises questions about Europe’s ability to scale green technologies in a competitive global market.

What’s Next for Northvolt?

Looking ahead, Northvolt is exploring restructuring options, with proposals from potential partners due by early December. Without a viable solution, the company has enlisted Hilco Global to prepare for a potential liquidation. The outcome will not only determine Northvolt’s future but could also impact Europe’s broader efforts to lead in green energy industries.

Peter Carlsson, who resigned shortly after the bankruptcy filing, warned that Europe risks falling behind on green projects if it doesn’t act decisively. “We’ll regret it in 20 years if we’re not driving the transition to clean technologies,” he told reporters. His comments reflect the frustration of a founder who once envisioned Northvolt as a cornerstone of Europe’s energy transition.

While Northvolt’s U.S. facility remains operational, rumors persist about plans for a multibillion-dollar battery factory in Canada, with an announcement expected soon. The company declined to comment on these developments.

As Northvolt fights for survival, its story serves as a stark reminder of the challenges in scaling ambitious green energy projects. Whether it can rise from the ashes or fade into liquidation remains to be seen. For now, the once-celebrated pioneer of Europe’s electric future finds itself at a critical crossroads.