Mystery deaths and no cash, Northvolt may now get a rescue package

Europe’s “green dream” Northvolt is fighting to keep afloat. The Swedish-owned battery maker is now hoping a fresh injection of millions of dollars from its cofounder will generate a rescue package from other investors and keep the lights on.

According to Reuters, Northvolt’s cofounder Harald Mix is willing to funnel 100 million crowns ($9.50 million) into the group and may be joined by pension funds AMF and AP and other investors. The goal is to secure short-term funding of some $217 million, according to the report, to stabilize the group’s finances. According to some media reports, about $160 million has already been secured through verbal commitments.

Northvolt has hit hard times in recent months, once thought of as Europe’s best shot to homegrown EVs and the makers of “the world’s greenest battery.” Enthusiasm mounted as the company opened the doors to its first plant in Sweden, in the small town of Skelleftea near the Arctic Circle, in 2021, with Telsa’s former chief products officer Peter Carlsson at the helm. Billions of dollars have been invested into the company, and Volvo, VW, and BMW rushed to place future orders.

All of this enthusiasm has been fueled by a vision to cut dependency on China by creating greener EV batteries using 100 percent recycled nickel, manganese, and cobalt. Plans were put in place to build factories in Gothenburg, in southern Sweden, and Poland, Germany, and Canada, all backed by huge government subsidies. Back in January, the company raised an additional $5 billion, firmly locking in its position as one of Europe’s best-funded startups and recipient of the largest-ever green loan in the EU.

Then things started going south. For one, workers were dying. In January this year, a 33-year-old Northvolt employee was found dead in his bed after working a shift at the plant. A month later, a 19-year-old man who worked at the company mysteriously died in his bed after his shift. In June, another man, in his 60s, also collapsed and died at home after coming home from work. Swedish police have launched an investigation, and the probe will continue through the end of the year. Other reports have also started coming out, including workers complaining of unsafe conditions by being “forced” to handle toxic waste without proper equipment. Since 2019, 26 serious workplace accidents have been reported, according to an investigative report published in Dages Nyheter (source: Courrier International).

Northvolt’s production problems have been the real crux of the issues, with massive delays forcing BMW to cancel its €2 billion battery cell order with the company. This past May, Northvolt also announced that it pushing back its plans for an IPO until next year. The interim report that followed revealed the dire state of its finances and how far its production had fallen short of goals, with CEO Peter Carlsson admitting he had been “too aggressive” with the company’s expansion plan.

Since Northvolt has put in place a series of changes to reset the company’s course, including bringing onboard a new CFO, leaving the former CFO to focus solely on expansion plans. Plus the company started making cuts, including closing down its research center, Cuberg, in San Francisco and deprioritizing secondary businesses. At the end of September, Northvolt announced that it would cut 1,600 staff from three Swedish sites and about 20 percent of its international workforce.

Now Northvolt has a chance to get a rescue package if a consortium of investors comes through. But so far, details coming from those involved are scant. “We in general have constructive dialogue with our investors, lenders and customers and see progress,” an AP spokesperson told Reuters, declining to comment any further. The investment arm of Goldman Sachs Group, Northvolt’s second biggest owner, may also jump in and help, but Reuters reports that the company had declined comment.

Of course, other battery makers have hit hard times as well, including Stellantis-backed Automative Cells Company, which has stopped construction on factories in Germany and Italy. Volkswagen too has recently scaled back its plans to build battery cell factories in Europe and North America as well.  

Photo credit: Northvolt

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