Key Points
- Northvolt is seeking €200 million in short-term funding to stabilize its finances.
- The company aims for larger long-term capital but faces immediate cash flow issues.
- Production problems, sluggish demand, and competition have led to setbacks, including losing a $2 billion BMW order.
- Despite internal struggles, Northvolt remains committed to building a factory in Germany with EU state aid.
Swedish electric vehicle battery manufacturer Northvolt is discussing with investors and lenders to secure around €200 million ($218 million) in short-term funding, according to three sources familiar with the matter. These talks have occurred over the past week as the company seeks to stabilize its finances. Northvolt, once considered Europe’s best hope for a homegrown electric vehicle battery champion, is now racing to raise funds to address financial challenges. The company still aims to secure larger capital for long-term sustainability, but immediate cash flow issues have prompted it to seek interim funding.
On Friday, Northvolt reiterated a statement from September 24, confirming that it had made significant progress in its fundraising efforts but declined to provide further comments. One source said the new funding under discussion may include a mix of battery pre-orders and loans, with shareholders, customers, and lenders considering various forms of support. Although a verbal agreement for €150 million in funding exists, a final deal has yet to be finalized.
Despite these efforts, the short-term funding being discussed would not be sufficient for Northvolt in the long run, with one source expressing uncertainty about how long the funding would sustain the company. Northvolt had previously been seeking significantly larger sums, with Swedish media reporting a target of 15 billion Swedish crowns ($1.44 billion) earlier this year and, more recently, a goal of 7.5 billion crowns.
Northvolt’s financial struggles have come to light in recent months, with production challenges, lower-than-expected demand, and increasing competition from China. These issues prompted BMW to cancel a $2 billion battery order, while Scania, another key customer, has faced delays in ramping up its electric vehicle (EV) production. Northvolt has responded by cutting jobs and slimming down its operations.
Despite these setbacks, Northvolt affirmed its commitment to building a factory in Heide, northern Germany, with EU-approved state aid. A spokesperson for Germany’s economy ministry confirmed this commitment but stated that the current challenges are due to Northvolt’s internal issues, not the German government’s support for the project.
Founded in 2016, Northvolt has received over $10 billion in equity and debt financing from major players such as Volkswagen, Goldman Sachs, and BlackRock. However, Swedish Prime Minister Ulf Kristersson recently ruled out any possibility of the Swedish government taking a stake in the company.
