The company was negatively affected by slow EV adoption, suffering net losses of $1.2 billion last year:
Swedish electric vehicle (EV) battery manufacturer Northvolt filed for bankruptcy after the company's dreadful liquidity position left the business with only one week's worth of cash to fund its operations.
The Chapter 11 petition was filed at the U.S. Bankruptcy Court for the Southern District of Texas on Thursday. The company listed assets and liabilities in a range of $1 billion to $10 billion, with creditors estimated to be between 1,000 and 5,000. Established in 2016 in Stockholm, Northvolt is an energy-storage company that manufactures lithium-ion batteries.
A leading manufacturer in the European Union, Northvolt competes with China's BYD and CAT to supply batteries to carmakers in the region. As such, the bankruptcy of Northvolt presents a challenge to Europe's ambitions to counter Chinese EV dominance.
[...] Asian manufacturers continued to ramp up production while bringing down battery prices, which put "further stress on newer battery manufacturers like Northvolt." Facing such challenges, the company suffered a net loss of $1.2 billion in 2023.
Previously: South Korean EV Battery Makers Reporting Big Losses as EV Demand Slows
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Battery maker LG Energy Solution's second-quarter profit dropped 58% year-on-year to 195.3 billion won ($141m), the company said on Monday (8 July), as demand for electric vehicles (EVs) slows:
The South Korean-based battery company also saw its revenue drop 30% to 6.2 trillion won ($4.4bn).
The company also faces increased competition from its Chinese rivals, which has weakened its share of the market.
Car manufacturers have been calling for battery companies to create cheaper cells to lower EV prices, which has applied pressure to companies like LG Energy.
This led to LG Energy's chief technology officer, Kim Je-Young, stating that the company would commercialise dry-coating technology by 2028, a technology which makes battery manufacturing cheaper and more efficient.
Battery maker SK On declares 'emergency' as EV sales disappoint. Supplier to Ford and Volkswagen may have to be rescued by its South Korean parent as losses mount:
A leading South Korean producer of electric vehicle batteries has declared itself in crisis as its customers struggle with disappointing EV sales in Europe and the US.
SK On, the world's fourth-largest EV battery maker behind Chinese giants CATL and BYD and South Korean rival LG Energy Solution, has recorded losses for 10 consecutive quarters since being spun off by its parent company in 2021. Its net debt has increased more than fivefold, from Won2.9tn ($2.1bn) to Won15.6tn over the same period, as western EV sales have fallen far short of its expectations.
With losses snowballing, chief executive Lee Seok-hee announced a series of cost-cutting and working practice measures last Monday, describing them as a state of "emergency management".
[...] SK On has made a series of aggressive investments in the US and Europe in recent years, betting on a widely predicted boom in demand for EVs. However, it has since announced extended lay-offs for workers at its plant in the US state of Georgia and delayed launching a second plant in Kentucky, a joint venture with its principal US customer Ford.
Previously:
- LG Energy Solution to Spend $3 Billion to Expand EV Battery Production in South Korea
- Honda and LG are Investing $3.5 Billion in New Ohio Battery Factory
- Ford Motor Company is Planning a Big EV Future
(Score: 5, Interesting) by looorg on Monday November 25, @12:12PM (2 children)
From what I can gather they are now basically waiting for the chain reaction to keep going. Northvolt was not even the start of the chain, it was their customers in the automotive industry that realized that electric cars were not selling like hotcakes and there was no need for the quantities of batteries it would take to make this work. The once mentioned that dropped orders were BMW and VM. Also euro made batteries are more expensive then once from the east. So they cut orders.
Add to that the problems Northvolt had with production and construction of their facilities. There have been a more or less a constant stream here of news about problems with construction, the cities where they are located, how there are no places to live for the workers so they live in barracks. Problem with getting the right workers to move up to just south of the arctic. Then there is also the issue that there have been multiple deaths just in the last year of people working in the factory, unknown causes but assumed to be chemical related. They have also been completely dependent on China for their production, so they are the last stop in the Chinese battery chain.
(Score: 3, Interesting) by VLM on Monday November 25, @01:19PM (1 child)
The way I read it was BMW dumped them for non-delivery on a signed contract not lowered demand preventing a signed contract. One of us may have misread that. I assume by VM you mean VW and I don't know what happened with that one. Not entirely clear why they were unable to deliver to BMW.
Their marketing seemed to focus on vertical integration, buy lots of parts and materials from China then ship working "systems" as a unit, meanwhile ship vehicle batteries in bulk to pay the bills until vertical integrated products take off. However, the customers seem uninterested in the vertical integration products and the vehicle market seems to be imploding.
Last stop in the Chinese battery train would be more like the Milwaukee Tool business model, get a big shipping crate from China, repack into individual product packaging as their primary service (aside from marketing, distribution, etc)
(Score: 4, Informative) by looorg on Monday November 25, @06:36PM
Right. That should have been VW. I think we are both correct regarding BMW. It was during the summer that they dropped orders due to the delivery date being not met as it would not arrive until about two years later then they had agreed to initially. So instead they dropped the order and bought batteries from Samsung instead. They both claim that they'll totally buy from them and work with them in the future. Except now I guess there might not be much of a future.
https://www.handelsblatt.com/unternehmen/industrie/bmw-autohersteller-storniert-milliardenauftrag-bei-northvolt/100046782.html [handelsblatt.com]
The municipality of Skellefteå are now so in debt they are on the verge of bankruptcy. Lucky for them municipalities can't go bankrupt in Sweden. The state will just step in and cover their costs and they'll be forced to raise taxes.
Also I guess it's not great when papers are starting to call the whole thing The Green Pyramid scheme. The only once that have apparently made off like bandits are the early investors that have already cashed out and the CEO that stepped down a week ago. Everyone else is apparently left holding the very empty bag.
There have been a problem all along where visions and reality doesn't match up. Some green-fueled fantasy just driving down into the chasm of reality. They all want an electrified battery future. But there just isn't a working market for it. In some regard it's probably due to a lack of actual power generation. That have been neglected for decades. They are only now starting to plan for new nuclear power again, after all wind and sun was just never going to supply enough when or as needed. But they are trying to build an electrified future without actual production or storage capacity. So green-fueled-fantasy-land. It's how they want things to work, not how they actually work.
Question now is what are they going to do in the factory. It seems it would be a very specific construction. Might not be suitable for many other things. Empty shell. A monument to hubris.
(Score: 4, Insightful) by VLM on Monday November 25, @01:11PM (4 children)
Yeah I donno about that word choice. Wants to pretend to compete maybe. The way I read it, they lost a $2B signed deal with BMW because they couldn't deliver. I suppose its a fine word choice between "compete with China" and "couldn't financially compete with China on time" or something like that, but its not as simple as all their customers ordered on aliexpress so they eventually closed.
Another curious point is their Swedish plant filed for bankruptcy about two months ago so the US subsidiary filing this month, is not entirely a surprise.
Their capital cost is about three million dollars per employee... and that resulted in a gross revenue per employee for the last couple years around $20K. So, their return on capital is about 0.6% before expenses. The USA t bill rate is about 4.6% right now so they would make about eight times as much revenue buying tbills if they gave up on operating factories, oof. Then the financials are full of "adjusted adjusted adjusted" and they lose about $100K/yr per employee, which is probably more than they're paying the employees LOL.
The sales projections in their annual report are ... amusing, showing 50% YoY growth in passenger car battery sales until the 2030s. Yeah, I don't think so.
The greenwashing in the annual report is very intense, that's usually a pretty strong indicator of a scam / money loser situation. Then there's the pyramid-shaped financial results. Hmm.
Another interesting feature of their annual report is lots of talk about vertical integration; I'm not sure that strategy is going to win in the marketplace. They may be doing it wrong at a very basic level.
Also they report 35% of their cell components came from Europe in 2023... implying, I guess, that the other 65% came from China. May as well buy completed systems from China.
Their factories are asymmetric in size and importance; they have six factories, at least on paper, although most of their employees and capacity were in Ett Sweden and that's lost financing, declared bankruptcy months ago, and the future looks very grim to me. Ett is/was more than ten times as large as the Cuborg site in the USA that's now bankrupt in the article.
If you're familiar with dotcom era financial reports this will be familiar. Instead of everything is e- or i- and being on the internet means magic instant money, everything in their reports is greenwashed and DEI to the max and that is supposed to, in a similar way, magically make money; although apparently it has not made money and likely never will. The problem with that business strategy is eventually they run out of long term capital investment to pay the daily expenses.
(Score: 2) by PiMuNu on Monday November 25, @01:31PM
> Instead of everything is e- or i- and being on the internet means magic instant money, everything in their reports is greenwashed and DEI to the max
I guess the structural difference between dotcom and this is that dotcom can be done from a garage and ramped to scale relatively quickly; whereas this requires real and significant capital investment to build a factory.
> May as well buy completed systems from China.
I guess the West finds out that China is in the lead and infrastructure counts.
Unlike 100 years ago (USA), China is not a fluffy democracy. But capitalism doesn't care!
(Score: 2) by DadaDoofy on Monday November 25, @03:10PM (2 children)
Nothing a good tariff couldn't fix, but Europeans would rather their manufacturing base goes down in flames than follow the lead of the bad orange man.
(Score: 2) by janrinok on Monday November 25, @04:18PM (1 child)
There are many other negative effects of tariffs, including that they drive prices up for the people you are representing.
I am not interested in knowing who people are or where they live. My interest starts and stops at our servers.
(Score: 3, Touché) by VLM on Monday November 25, @05:40PM
Prices don't matter if none of them have a job.
(Score: 2) by Frosty Piss on Monday November 25, @05:07PM (1 child)
There's no beating the slave labor of Chinese producers. You think this is a "troll"? It's a known provable fact.
(Score: 3, Troll) by VLM on Monday November 25, @05:44PM
Thats a good reason for tariffs. "We agree we will all not ruin the river or force slaves to labor for 100 hours/week" If another country says "ha ha doing it anyway" then they need a tariff to equalize things. This is hopefully what we'll get.
(Score: 2) by Username on Monday November 25, @05:43PM (3 children)
A battery plant next to a lithium mine in Sweden files for bankruptcy in Texas.
(Score: 2) by looorg on Monday November 25, @06:22PM (2 children)
It's complicated. They also had a plant in the US that they sold, there was/is another one in Canada. The second plant in Sweden was just suspended before construction could beging. They might have had even more, after all big massive scale fantasies just imploded. But there are probably more favorable laws in regards to restructuring and bankruptcy there then in Sweden or one of the large investors was Goldman-Sachs, they more or less just changed their investment valuation to a big fat zero some days ago.
(Score: 2) by quietus on Monday November 25, @06:31PM (1 child)
Six, prospective, plants -- I don't think their very first plant is even up to continuous production scale, at the moment. Haven't heard of a plant in the States: all 6, apart from one (Canada), are in Europe.
I don't know what protections Chapter 11 offers to executives: maybe there's the reason.
(Score: 3, Informative) by looorg on Monday November 25, @06:46PM
They bought a plant in the US a few years ago but now had to sell it again to Lyten to try and raise cash. Perhaps this is the explanation as to the bankruptcy filing in the US? I don't know. There must be a reason you do it in the US first, perhaps the laws are more pro-business there or something.
https://www.bloomberg.com/news/articles/2024-11-13/troubled-northvolt-sells-us-battery-plant-to-startup-lyten [bloomberg.com]
(Score: 2) by quietus on Monday November 25, @06:26PM (2 children)
The typical pic associated with an article about NorthVolt is a factory in an ice-and-snow covered landscape. There's a reason for that: their only factory, Skelleftea, is situated close to the Arctic Circle.
Only during 5 months of the year does Skelleftea's mean daily temperature rise above zero degrees Celsius. Their last cultural activity that got some publicity was the building of a library -- in 2021. If you're now thinking that's prime territory for a young and ambitious engineer to go spend his/her career, well ... you're pretty much alone.
So alone in fact, that they had to import Chinese workers to staff the factory and its machinery (which was also mainly Chinese btw). A little problem though: those Chinese workers only spoke, well, Chinese. Or maybe they only pretended to do so: having to go between your work and your barracks, covered in two or three coats, really doesn't help the mood much. Did I mention that it tends to be quite dark there too for a large part of the year, and that alcohol is damn expensive in Sweden?
So you have a battery factory, where the distance to the prospective customer is measured in air miles (to be precise, it's 1170 miles (1883 km) between Skelleftea and Wolfsburg, where Volkswagen is located -- assuming you fly damn-straight). Combine that with slightly confident management: already building a second (NorthVolt Dwa, Poland) and third (NorthVolt Zwei, Germany) plant before they'd even finished building the first one. Followed by a fourth, fifth and sixth (NorthVolt Six, Canada): all in roughly 5 years time.
They did forget to change the name of the city in something more appropriate, though: maybe skellefflakka [wikipedia.org]?
(Score: 3, Informative) by looorg on Monday November 25, @07:00PM (1 child)
It's pretty nice up there if you like hunting, hockey and being left the fuck alone. It's just cold. And dark, for half the year and the other half of the year the sun never really sets so perhaps it evens out ... Along the coast it's okay. But as soon as you go in land you are in nowhere until you reach the Norwegian coast. There is just nothing out there except outpost for mining and forestry. For our American friends, living there would be like living in northern Canada or in northern Alaska. The only reason people are there in the first place if mining and forestry. That and some indigenous people and their deer herds.
Taking the train up to Umeå, Luleå or Kiruna is beutiful. I just wouldn't want to move up there and live there.
(Score: 2) by quietus on Tuesday November 26, @07:33PM
I once met a girl from Tuulikintie, Finland -- that's about the same latitude, I guess. Everybody has a gun, and the one thing that gets you through the cold and dark period is strong liquor. No pussy-footing around with adding ice or water to your whiskey, no sirree: that's akin to cursing in church. End result, a peak in suicides.
Anyway, no bad word about the good people in Skelleftea, nor its location: for my silly quip in that last sentence I was thinking about NorthVolt's management megalomania, and not about the hardened folk who live there.
(If I ever get there, I don't want to get into a bar brawl because something I said on Soylentnews -- and if I do, I hope it will be with the MOTD on my lips, when I go down.)